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Petitioners produced only two items, two Amway bulletins, one
entitled “Bulletin No. 3 Distributorship Inheritance” and one
entitled “Bulletin No. 3A Trust”, in support of their position.
We find that the Amway activity was not an appreciable asset, and
we are also not convinced that petitioners believed that it was
such an asset. Sec. 1.183-2(b)(4), Income Tax Regs.
Petitioners’ gross income from the sale of Amway products
never exceeded their expenses. Petitioners reported total gross
income over a 5-year period of $1,509. The $61,159 of Schedule C
expenses claimed during the 5 years of their participation in the
activity virtually guaranteed that petitioners would not earn a
profit. Elliott v. Commissioner, supra at 972; sec. 1.183-
2(b)(6) and (7), Income Tax Regs. Petitioner’s partial
explanation for their losses, that their downline distributors
“weren’t very motivated” in selling the Amway products, fails to
explain adequately the reason for the continuing losses over a
period of years.
Considering the record in its entirety, we are satisfied
that petitioners did not have the actual, honest, and bona fide
objective of making a profit. It appears that they became Amway
distributors simply to deduct expenses for items of a personal
nature. The claimed Schedule C deductions relating to the Amway
activity are allowed only to the extent of the gross income
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