James R. and Janet M. Landrum - Page 13

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          place prior to the years in issue.  By the beginning of 1996,               
          petitioners had ample experience with Amway and even had tried it           
          for the appropriate initiating time with their new group and the            
          aid of their “personal friends”.  Their decision to continue                
          their Amway activity during 1996 and 1997 after their extensive             
          and wholly unsuccessful experiences with Amway simply cannot be             
          accepted as a bona fide business decision.                                  
               Petitioners did not conduct their Amway activity in a                  
          businesslike manner during the years in issue.  They had no                 
          separate bank account for Amway.  They had no records concerning            
          their meager receipts.  Mr. Landrum suggested that the few                  
          dollars of receipts must have been from the little checks that              
          Amway occasionally sent, but he had no records about such                   
          matters.  Petitioners kept receipts of expenditures and                     
          calendars, but these materials were not organized or analyzed in            
          any manner to improve results.  Petitioners did not retain                  
          canceled checks or banking records to prove their expenditures.             
          Petitioners had no business plan other than the 6-4-2 concept and           
          a one-page inspirational listing of such items as “Listen to at             
          least one audiotape promoted by our upline” and “Read 15 minutes            
          per day from a book promoted by our upline”.  They did not                  
          consult with business experts but relied only on advice from one            
          of their upline distributors and other interested Amway persons.            

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