Kenneth C. & Becky J. Theisen - Page 7

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          operating their Amway activity.  Petitioners' Amway activity                
          resulted in a net loss for taxable years 1992 and 1993.  Although           
          it is not unusual for a business to incur losses in its early               
          years, we believe that petitioners never had any intention of               
          making a profit from this activity.                                         
               Petitioners contend that their Amway activity was motivated            
          by profit.  Petitioners averred that they carried on their Amway            
          activity in a businesslike manner, maintained complete and                  
          accurate financial records and books, studied the market and                
          strategies of others, attended seminars, and conformed their                
          sales techniques with more successful approaches.  However, the             
          record indicates that petitioners did not operate in a                      
          businesslike manner.  Petitioners did not have a business plan,             
          nor did they conduct a break-even analysis.  Petitioners had no             
              Petitioner candidly admitted in court that one of the major            
          benefits of being an Amway distributor was that such distributors           
          could purchase various products for personal use at a discount of           
          15 to 50 percent, if not more.  He further stated that the                  
          opportunity to purchase discounted products was a benefit.  His             
          testimony evidenced that petitioners used their Amway                       
          distributorship for their own personal financial gain.  He                  
          stressed this benefit when he made sales pitches in his attempts            
          to recruit potential downliners.                                            

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