Kenneth J. Nissley and Terri C. Connor Nissley - Page 9





                                                - 9 -                                                  


                  Petitioners claimed expenses related to their Amway activity                         

            on Schedule C of their tax returns for 1991 through 1998 as                                

            follows:                                                                                   

                  1991       1992       1993       1994                                                
                  Bad debts                   ---        ---       ---      $   835                    
                  Car expenses                ---     $ 8,170    $10,173      6,794                    
                  Commissions/fees         $ 1,083      5,064      8,286      4,379                    
                  Interest expense            ---        ---        ---         672                    
                  Office expense             2,497      5,478     10,646      6,587                    
                  Repairs                     ---          62       ---        ---                     
                  Supplies                   4,257      7,875      1,517        —                      
                  Travel                     4,915      7,637      5,633      4,858                    
                  Meals/entertainment1         302        794      1,024      1,002                    
                  Utilities                   ---        ---        ---       4,861                    
                  Other expenses                                                                       
                  Awards/gifts             ---          57       ---        ---                        
                  Books/subscriptions/                                                                 
                  tapes                 ---        ---        ---         369                          
                  Seminars                 ---       1,384       ---       1,394                       
                  Use of home                           2,592      2,117      1,265                    
                  Total expenses         $13,054    $39,113    $39,396    $33,016                      

                             1Net after 20 percent reduction for 1991-93 and                          
                  50 percent reduction for 1994 per sec. 274(n).                                       


                  1995       1996       1997       1998                                                
                  Advertising              $ 2,078    $   326    $ 1,105    $   952                    
                  Car expenses              13,214     11,070      8,604      7,839                    
                  Commissions/fees           6,461      5,152        864       ---                     
                  Depreciation                 679        517        539       ---                     
                  Interest expense             488       ---         458        423                    
                  Legal/professional          ---        ---         310       ---                     
                  Office expense             8,371     11,026      5,796      5,942                    
                  Supplies                     676      3,985      3,712      4,856                    
                  Travel                     6,664      5,287      4,596      3,872                    
                  Meals/entertainment1       2,125      1,466      1,496        989                    
                  Other expenses                                                                       
                  Books/subscriptions/                                                                 
                  tapes                  992        884      ---         ---                           
                  Seminars                1,805      2,376     2,047       1,818                       
                  Uniforms                 ---         342      ---         ---                        
                  Use of home                2,510      2,485      ---         ---                     
                  Total expenses         $46,063    $44,916    $29,527    $26,691                      


                  1Net after 50 percent reduction for 1995-98                                          
                  per sec. 274(n).                                                                     






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