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of his income from other sources on his return for 1993, would
have put an ordinary prudent taxpayer on notice that this
activity was unlikely to produce a profit.
The Ogdens carefully avoided any reference to Amway on the
Schedules C. For instance, in 1993, Mr. Ogden neglected to
report gross sales of $43,575 and cost of goods sold of $42,493
resulting in gross income of $1,082. He reported the gross
income of $1,082 and a net loss of $20,250, after deducting
$21,332 in expenses. It appears clear that Mr. Ogden should have
realized that his golden opportunity was not golden and that he
would not make a profit. Mr. Ogden and then his wife continued
to suffer substantial losses for at least the next 4 years after
1993. We find that petitioners' involvement with Amway enabled
petitioners to purchase household goods at cost and to take
substantial deductions to offset their wage income, not to make a
profit. We sustain respondent's determination as to the
deficiencies for all 3 years in issue.
Section 6662(a) provides for an accuracy-related penalty in
the amount of 20 percent of the portion of an underpayment of tax
attributable to, among other things, negligence or disregard of
rules or regulations. Sec. 6662(a) and (b)(1). Negligence is
defined to include any failure to make a reasonable attempt to
comply with the provisions of the Internal Revenue laws. Sec.
6662(c); sec. 1.6662-3(b)(1), Income Tax Regs. Moreover,
negligence is the failure to exercise due care or the failure to
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