- 17 - than the Amway “9-4-2 plan”) ever developed. Furthermore, for the year in issue, no in-depth analysis was ever performed in order to determine how many “downline” distributors were needed to attain a break-even point. Although Mrs. Meyer estimated that 25 distributors were required to attain a “bare bones” standard of living, such estimate was not based on a business plan or any independent analysis. Rather, Mrs. Meyer was content to rely on the profitability worksheet given to her by an “upline” distributor. A third factor militating against petitioners’ claim of profit objective is the fact that petitioners had no experience with Amway or an Amway type of activity at the time that they were recruited by an Amway distributor. See sec. 1.183-2(b)(2), Income Tax Regs. Since that time, petitioners have principally relied only on advice from “upline” distributors and other interested Amway individuals. Yet, under the Amway system, the “upline” distributor’s bonus is not directly affected by the “downline” distributor’s profitability or lack of profitability; rather, what is important to the “upline” distributor is the “downline” distributor’s volume of sales. Nevertheless, petitioners have steadfastly refused to seek meaningful counsel from disinterested third parties regarding means by which the Amway activity might be madePage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011