Broadrick R. Moore and Dawn J. Ingram - Page 12




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          underlying income and expense data, reports, and other business             
          records and their failure to reconstruct the income and expense             
          reports indicate a disregard of businesslike activity and profit.           
          Id.                                                                         
               Petitioners asserted that they changed the way they did                
          business (i.e., marketing) in 1996, but petitioners have offered            
          no factual support for this assertion.  Continuing to operate               
          such an unprofitable activity, even after a change in strategy              
          that was unsuccessful, indicates a lack of profit objective.                
          Filios v. Commissioner, 224 F.3d at 24; sec. 1.183-2(b)(1),                 
          Income Tax Regs.                                                            
               Petitioner testified that “if products don’t move, profit              
          doesn’t move”; yet petitioners failed to provide any indication             
          of how they attempted to sell the Amway products.  Petitioners              
          did not present any facts or business records concerning sales of           
          products to customers such as customer lists or distribution                
          order forms.  Rather, petitioners’ goals list and testimony                 
          indicate that they focused on establishing a downline chain of              
          distributors more than they focused on selling products.                    
          Moreover, petitioners claimed that they had approximately 30                
          downline distributors, but they neither produced a list of these            
          downline distributors nor had any of them testify.  We are not              
          convinced that petitioners focused on selling Amway products and            
          that they focused on earning a profit.                                      






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