Kenneth J. Nissley and Terri C. Connor Nissley - Page 14

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            earned a profit but have incurred losses for 8 consecutive years.                          
            Indeed, at the time of trial in November 1999, petitioners                                 
            expected to incur another loss for what would be the ninth                                 
            consecutive year.                                                                          
                  Moreover, petitioners’ losses have been substantial in                               
            amount, ranging between $19,107 and $33,539 for each of the 7                              
            years during which petitioners have conducted their Amway                                  
            activity for a full 12 months.  Indeed, petitioners’ aggregate                             
            losses for the 7-1/2-year period from mid-1991 through 1998                                
            amount to $187,754 and average over $25,000 on an adjusted annual                          
                  Further, there has not been any significant trend                                    
            discernible in the history of petitioners’ losses.  For 1994                               
            through 1996, the 3 taxable years in issue, petitioners incurred                           
            losses of $27,407, $33,539, and $27,787, respectively.  While it                           
            is true that petitioners’ losses have decreased since 1996, it is                          
            also true that a comparison of 1997 and 1996 demonstrates that                             
            petitioners’ gross income decreased at a faster rate (57 percent)                          
            than did petitioners’ expenses (34 percent).  The same is true                             
            when 1998 and 1996 are compared.                                                           
                  Also relevant is the fact that “the goal must be to realize                          
            a profit on the entire operation, which presupposes not only                               
            future net earnings but also sufficient net earnings to recoup                             
            the losses which have meanwhile been sustained in the intervening                          

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