- 9 -
cost. Consequently, any opportunity for petitioners to make a
profit was limited to Amway bonuses.
Petitioners claimed car and truck expenses in excess of the
gross receipts reported on their 1992 and 1993 Schedules C. The
parties agreed that petitioners' 1992 vehicle expenses attributed
by petitioner on the returns to business use was 57 percent of
the total mileage. In 1993, petitioners purchased a new vehicle
and claimed 70 percent of its expenses as business expenses on
the return. Petitioners' 1992 ledger shows that 50 percent of
their telephone bill was attributed to business use, and the
other 50 percent was for personal use. In 1993, that ratio
increased to 80 percent business use and 20 percent personal use.
Petitioner could not explain why there were such substantial
increases in vehicle and telephone expenses without a concomitant
increase in revenue.
Petitioners contend that their detailed ledger of income and
expenses supports their position that their Amway activity was
motivated by profit. Although a detailed ledger of income and
expenses is relevant, it appears that petitioners maintained
these records for substantiation purposes rather than to monitor
the income and expenses of their Amway activity. As stated
repeatedly on the record, substantiation is not an issue in this
case.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011