Broadrick R. Moore and Dawn J. Ingram - Page 11




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          “Business Expenses” incurred in 1996 and 1997, and a chart of               
          “Office Expense” from 1996.  They maintained and produced monthly           
          calendars reflecting both Amway-related entries and personal                
          entries for both 1996 and 1997.  Also, Ms. Ingram claimed that              
          they opened a bank account for their Amway activity.                        
               Nevertheless, we conclude that petitioners’ overall approach           
          to their activity was not businesslike.  See sec. 1.183-2(b)(1),            
          Income Tax Regs.  The records that petitioners produced do not              
          reflect details concerning their Amway activity, such as products           
          sold, clients, or downline distributors.  In addition, the goals            
          do not provide any indication of how petitioners planned to                 
          achieve the points and commissions, or how to find the customers.           
               Despite being given ample opportunity to produce relevant              
          business records, petitioners failed to do so, and they failed to           
          offer an explanation for their absence.  For example, petitioners           
          failed to produce a copy of their business plan and bank records.           
          Petitioners produced an “Office Expense” chart for 1996, but not            
          for 1997, and did not offer any supporting bills or proof of                
          payment of any of the expenses.  Petitioners did not retain paper           
          copies of the quarterly, semiannual, and annual reports of income           
          and expenses that they purportedly kept.  Petitioner explained              
          that when their computer upgrade crashed, they lost all reports.            
          We are skeptical that all data that went into the reports was               
          irretrievably lost.  Petitioners’ inability to produce the                  






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