Kenneth C. & Becky J. Theisen - Page 9

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          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            

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