Friscia Construction, Incorporated, et al. - Page 8




                                        - 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