Karl Meyer and Vickie Meyer - Page 17




                                       - 16 -                                         
          Income Tax Regs.  Although petitioners maintained computer-                 
          generated records for the Amway activity (and may also have                 
          utilized a separate bank account), such records appear to have              
          been maintained principally to satisfy substantiation                       
          requirements imposed by the Internal Revenue Code and thus to               
          “guarantee” the deductibility of expenses.  In contrast, such               
          records do not appear to have been used as analytic or diagnostic           
          tools in an effort to achieve profitability of the Amway                    
          activity.  As we have previously stated:                                    
               the keeping of books and records may represent nothing                 
               more than a conscious attention to detail.  In this                    
               case, there has been no showing that books and records                 
               were kept for the purpose of cutting expenses,                         
               increasing profits, and evaluating the overall                         
               performance of the operation.  The petitioner reviewed                 
               her records, but she has failed to show that she used                  
               them to improve the operation of the enterprise.                       
               [Golanty v. Commissioner, supra at 430.]                               
               Moreover, petitioners did not maintain certain types of                
          records, nor did petitioners employ certain elementary business             
          practices that one would expect of individuals pursuing an                  
          activity with a profit objective.  See Nissley v. Commissioner,             
          T. C. Memo. 2000-178; Ogden v. Commissioner, supra; Theisen v.              
          Commissioner, T.C. Memo. 1997-539; Hart v. Commissioner, T.C.               
          Memo. 1995-55.  Thus, although a monthly report of expenses was             
          maintained, neither profit projections, a break-even analysis,              
          nor a formal budget was ever prepared.  Further, no market                  
          analysis was ever undertaken, nor was any business plan (other              






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