- 8 - Petitioner spent a great amount of time, effort, and money on developing customers into distributors. For example, petitioner spent $3,274 in placing newspaper advertisements, and printing and distributing flyers to find new customers for the companies' products. Practically every day, petitioner took people to lunch or dinner so they would become his friends, because "people tend to buy from their friends."4 Petitioner held meetings in his home and hotel rooms for customers, and distributors who were not yet breakaway distributors, to share product result stories and introduce the people to the products, which he often provided as samples at no cost. At every opportunity, petitioner would propose to enthusiastic customers that they become distributors. If enthusiastic customers agreed to become distributors, petitioner provided them with application forms on which he was designated as the sponsor or up-line distributor. Petitioner has been regularly and continuously engaged in selling products for multilevel marketing companies since 1982. All of the multilevel marketing systems with which petitioner is involved include a royalty payment structure. Furthermore, petitioner is involved in this business with the primary purpose 4 Petitioner reported that he spent $6,882 on meals and entertainment in 1994. He took the deduction for this expense on Form 1040 Schedule C, Profit or Loss From Business.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011