- 11 - petitioners (at the so-called emerald level) and sometimes would work with them. Mr. Landrum explained that his friend and upline adviser told him he would have to spend $500 per month on inspirational and instructive tapes and materials, for approximately 3 months, and then he could expect to gross $500 to $1,000 or more monthly from Amway. From this advice, what they read in Amway literature, and what they heard at Amway seminars, petitioners say that when they started a fourth time in 1995 they expected to start making a profit in 90 days. Despite mounting losses, petitioners continued their Amway activity for more than 2 years beyond the 90-day trial period, long after it was clear that the activity was not viable. The regulations provide that “where losses continue to be sustained beyond the period which customarily is necessary to bring the operation to profitable status such continued losses, if not explainable, as due to customary business risks or reverses, may be indicative that the activity is not being engaged in for profit”. Sec. 1.183- 2(b)(6), Income Tax Regs. The exact date when petitioners commenced their fourth effort at Amway is unclear, but petitioners’ own testimony establishes that it was in 1995. Since petitioners might have explained the starting date and failed to do so, we conclude that the entire 90-day starting period that petitioners mention tookPage: 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