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Business Review, states that the potential for earning income
increases as the number of distributors in a sponsor's group
grows and as sales increase. Distributors devote as little or as
much of their time to Amway activities as they desire. The eight
page Amway Business Review in large blocks on four of its pages
highlights the fact that "The Average Monthly Gross Income for
'Active' Distributors was $88."
Mr. Ogden obtained a Certificate of Operation under Assumed
Name for Ogden Enterprises. Mr. Ogden claims that Ogden
Enterprises is engaged in the business of selling Amway products.
On line B of Schedule C of each return for the years in issue for
Ogden Enterprises, under "principal business code", Mr. Ogden and
then Mr. and Mrs. Ogden listed "3012", which number represents
"Selling door to door, by telephone or party plan, or from mobile
unit". On their Federal income tax returns for the years in
issue, Mr. Ogden and Mrs. Ogden did not disclose that either of
them or Ogden Enterprises was engaged in an Amway activity. On
all three of these returns, line A of Schedule C, "Principal
business or profession, including product or service", contained
the words "PRODUCT DISTRIBUTION."
Mr. Ogden testified that 10 to 15 percent of the sales were
to non-distributor end-users who were not trying to build an
Amway distributorship. Petitioners have focused their efforts on
recruiting downliners in this multilevel marketing process.
Because of their efforts, Mr. Ogden personally sponsored 17
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