- 12 -
main source of income was from their employment as an engineer
and a paralegal. The relevant income was $31,381 in 1993,
$64,642 in 1994, and $64,462 in 1995. Mr. Ogden and then
petitioners obviously benefited from the significant deductions
they took as a result of the losses from their Amway activities.
These losses amounted to about 64 percent of income in 1993 and
about 30 percent of income in 1994 and 1995.
Another element is the personal pleasure or recreation
involved in the activity. Sec. 1.183-2(b)(9), Income Tax Regs.
Petitioners testified that they purchased $1,800 to $2,400 worth
of products per year for their personal use. Thus, they
purchased a substantial amount of household goods at a discount.
Cf. Theisen v. Commissioner, T.C. Memo. 1997-539. They claim
their travel is usually limited to day trips that consist of
meetings or showing the Amway plan, often at the house of new
recruits. Petitioners assert they find no pleasure in this type
of travel. They also stated that to reduce expenses they shared
a hotel room for a particular function in 1993 with 15 other
people.
Upon review of the entire record, we believe Mr. Ogden and
then Mr. and Mrs. Ogden did not have an actual and honest
objective of making a profit in the Amway activity during the
years in issue. It was obvious that Mr. Ogden's Amway endeavors
were a substantial economic loss and tax loss for 1993. The
large volume of losses, which he used to offset about 64 percent
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011