- 8 - 1990); Nissley v. Commissioner, T.C. Memo. 2000-178; Theisen v. Commissioner, T.C. Memo. 1997-539; Rubin v. Commissioner, T.C. Memo. 1989-290; Alcala v. Commissioner, T.C. Memo. 1984-664. In most of these cases, we found that the expenses of operating the distributorship at issue were so great in comparison to the revenue generated that the distributor lacked a true profit motive. Here, by contrast, respondent asserts that Michelle Friscia’s Amway distributorship was exceptionally profitable in that it generated $46,172 in proceeds with no expenses. We find this implausible, especially in light of the Friscias’ decision to discontinue the distributorship in 1994. The Friscias used the 649 account as a business account for the Amway distributorship, and the transactions therein reflect the items of income and expense for the Amway business. Michelle Friscia admitted that after discontinuing the business in mid- 1994, she began to pay personal expenses out of the account. However, she was able to identify legitimate business expenditures through her testimony and the bank records. The Friscias made payments totaling $36,996 to upline distributors and to Amway in 1994. We find that these payments represented $36,496 in deductible sales commissions and costs of goods sold.2 2On the basis of Michelle Friscia’s testimony, we find that $500 of the Amway products purchased in 1994 were for the Friscias’ personal household use.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011