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In the present case, Mr. Meyer is a successful salesman.
His aggregate commission income for the 3-year period from 1994
to 1996 amounted to $279,703, or approximately $93,000 per year.
For 1997, the year in issue, Mr. Meyer’s commission income
exceeded $97,000. On joint returns for each of these 4 years,
petitioners claimed losses from their Amway activity, which
losses served to reduce Mr. Meyer’s compensation, thereby
decreasing petitioners’ taxable income and achieving substantial
tax savings.11
This Court has observed that “there are significant elements
of personal pleasure attached to the activities of an Amway
distributorship” and that an “Amway distributorship presents
taxpayers with opportunities to generate business deductions for
essentially personal expenditures.” Brennan v. Commissioner,
T.C. Memo. 1997-60; see also sec. 1.183-2(b)(9), Income Tax
Regs.; cf. sec. 1.183-2(b)(8), Income Tax Regs., regarding the
reference to “personal or recreational elements” quoted above.
Moreover, petitioners received a personal benefit from their
Amway activity through their ability to purchase Amway products
for their own personal use at distributor’s cost without the
customary percentage markup. At trial, petitioners candidly
11 Those savings also helped to finance car expenses.
Thus, for example, in 1997 petitioners deducted automobile
expenses on their Suburban SUV based on “business” use in excess
of 74 percent.
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