- 16 - practices, that one would expect of individuals pursuing an activity with a profit objective. See Ogden v. Commissioner, T.C. Memo. 1999-397; Theisen v. Commissioner, T.C. Memo. 1997- 539; Hart v. Commissioner, T.C. Memo. 1995-55. Thus, petitioners did not maintain any written business plan for their Amway activity (other than the Amway “6-4-2 plan”). Further, petitioners did not maintain either a written budget or a monthly report of expenses, nor did petitioners prepare a break-even analysis. Also of significance is the fact that petitioners had no experience with the Amway-type of activity prior to the time that they were recruited by an Amway distributor. See sec. 1.183- 2(b)(2), Income Tax Regs. Since that time, petitioners have relied only on advice from one of their “upline” distributors and other interested Amway individuals. Yet, under the Amway system, the “upline” distributor’s bonus is not directly affected by the “downline” distributor’s profitability or lack of profitability; rather, it is the “downline” distributor’s volume of sales that is important to the “upline” distributor. Nevertheless, petitioners have steadfastly refused to seek counsel from disinterested third parties regarding means by which their Amway activity might be made profitable. See Poast v. Commissioner, T.C. Memo. 1994-399 (“for the most part, petitioners’ advisers were not experts as much as they were upliners with a financialPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
Last modified: May 25, 2011