James R. and Janet M. Landrum - Page 17

                                       - 16 -                                         
          Amway conventions and inspirational weekends.  But certainly on             
          this record we must conclude that they did not have an actual and           
          honest profit objective in their Amway activities in 1996 and               
          1997.  Because we hold that petitioners’ Amway activity was not             
          an activity engaged in for profit within the meaning of section             
          183, we do not explicitly address the alternative issue as to               
          whether petitioners are entitled to claimed Schedule C deductions           
          for expenditures relating to their Amway activity.  We note,                
          however, that, as pointed out above, we consider petitioners’               
          claims to such deductions exaggerated and erroneous, and we                 
          consider their testimony as well as the documents they presented            
          in substantiation to be inaccurate and distorted in their favor.            
               The examination in this case commenced after July 22, 1998.            
          Accordingly, section 7491(a), a new provision created by Internal           
          Revenue Service Restructuring and Reform Act of 1998 (RRA 1998),            
          Pub. L. 105-206, sec. 3001, 112 Stat. 726, concerning the                   
          allocation of the burden of proof, is effective.  Higbee v.                 
          Commissioner, 116 T.C.     (2001).  In the present case, we do              
          not rest our decision on the burden of proof.  As demonstrated              
          above, the totality of evidence here, including the stipulation             
          of facts, petitioners’ own testimony, and petitioners’ own                  
          records, amplified by their explanatory testimony, establish                
          overwhelmingly that petitioners did not conduct their Amway                 

Page:  Previous  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  Next

Last modified: May 25, 2011