- 7 -
expectation that well-trained first-level distributors would
develop successful second-level distributors, who in turn were
likely to develop third-level distributors.
Petitioner argues that the facts of Abraham v. Commissioner,
supra, are different from the facts of the instant case.
Petitioner testified that the multilevel-marketing industry has
undergone a big transition since we decided Abraham v.
Commissioner, supra. According to petitioner, the training and
motivation of distributors is now done by the companies with
video and conference calls. Petitioner, however, called no
witnesses nor produced any other evidence to corroborate his
testimony. We cannot assume the testimony of absent witnesses
would have been favorable to petitioner. Rather, the normal
inference is that it would have been unfavorable. Pollack v.
Commissioner, 47 T.C. 92, 108 (1966), affd. 392 F.2d 409 (5th
Cir. 1968); Wichita Terminal Elevator Co. v. Commissioner, 6 T.C.
1158, 1165 (1946), affd. 162 F.2d 513 (10th Cir. 1947).
Furthermore, we find that petitioner's own testimony does not
support his argument that this case is distinguishable from
Abraham v. Commissioner, supra.
Petitioner testified that in the year at issue he sustained
a loss on his own efforts to sell the companies' products, but
that he did so "with a view of developing distributors who will
break away and * * * generate more income * * * in a royalty."
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011