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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
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