James R. and Janet M. Landrum - Page 6

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          $100 of merchandise monthly, the initiator of the group will                
          receive commission based on monthly sales of $7,900, subject to             
          commission-sharing adjustments.  Mr. Landrum estimated that the             
          person who established a successful 6-4-2 grouping would receive            
          $1,800 to $2,200 in monthly commissions and then might proceed to           
          gain even greater benefits as a “direct distributor” who might              
          then triple his organization and receive an “Emerald bonus” and             
          then expand to have six legs and a “Diamond organization”.                  
          According to Mr. Landrum, Amway distributors with an emerald                
          organization make $75,000 to $100,000 annually, and those with a            
          diamond organization make $125,000 to $250,000 yearly, “And it              
          goes up from there” as he put it.1                                          
               Petitioners had no such experience during the years in issue           
          and all the earlier years of their participation in Amway                   
          distributorships.  There simply is no resemblance between the               
          wonderfully optimistic projection that Mr. Landrum recited and              
          the reality of petitioners’ experience during their many years of           
          association with Amway.                                                     

          1    See Nissley v. Commissioner, T.C. Memo. 2000-178, for this             
          Court’s recent summary of Amway operations with somewhat more               
          detail and less fantasy, at least as to himself, than Mr. Landrum           

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Last modified: May 25, 2011