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The parties stipulated that petitioners' records indicate
that they drove more than 30,000 miles per year in connection
with their Amway activities. The parties stipulated that
petitioners' records indicate that they have shown the Amway
plan, for about 2 hours per showing, approximately 137 times in
1993, approximately 200 times in 1994, and approximately 104
times in 1995, to recruit potential Amway distributors. The
Court was not persuaded that these records were accurate. We
agree with respondent that petitioners spent most of their time
recruiting downline distributors rather than selling products.
The expectation that assets used in the Amway
distributorship may appreciate in value is not relevant. Sec.
1.183-2(b)(4), Income Tax Regs. The success of petitioners in
carrying out other similar or dissimilar activities has been
addressed. Sec. 1.183-2(b)(5), Income Tax Regs.
Petitioners' history of income or losses with respect to the
Amway distributorship is revealing. Sec. 1.183-2(b)(6), Income
Tax Regs. Most of petitioners' gross income comes from the
bonuses provided by Amway. As noted, petitioners did not list
Amway on the Federal Income Tax returns. In fact, petitioners'
C.P.A. and petitioners failed to list their gross sales and their
cost of goods sold on their Federal returns, contrary to the
format of the Schedules C. Mr. Ogden testified that he did not
know why the gross sales were omitted from the 1993, 1994, and
1995 returns and that he did not learn of this omission until 3
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