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recreational elements involved.” Golanty v. Commissioner, 72
T.C. at 428-429; see Ransom v. Commissioner, T.C. Memo. 1990-381.
In the present case, petitioners are well-educated,
professional individuals, licensed as C.P.A.’s, who earn
substantial salaries from their full-time employment, as
demonstrated by the following table for the years in issue:
1994 1995 1996
Mr. Nissley $ 65,674 $ 67,916 $ 70,810
Mrs. Nissley 80,660 75,010 75,010
Total $146,334 $142,926 $145,820
For 1994, 1995, and 1996, petitioners claimed losses from
their Amway activity in the amounts of $27,407, $33,539, and
$27,787, respectively. Petitioners used those losses to reduce
their compensation and other income, thereby decreasing their
taxable income and achieving substantial tax savings. Those tax
savings helped to finance everyday expenses such as outlays for
car and home.5
5 For 1994, 1995, and 1995, petitioners deducted car
expenses in the amounts of $6,794, $13,214, and $11,070,
respectively. For each of the first two of those years, the
amount deducted for just this single expense exceeded
petitioners’ reported gross income from Amway for the year.
For 1994, 1995, and 1996, petitioners also claimed
deductions for use of home in the amounts of $1,265, $2,510, and
$2,485, respectively; for 1994, they also claimed a deduction for
utilities in the amount of $4,861. For 1994, the sum of just
these two deductions exceeded petitioners’ reported gross income
from Amway for that year.
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