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Sec. 1.183-2(b)(3), Income Tax Regs. Petitioners devoted
approximately two nights per week, and approximately two weekends
per month, to the Amway activity. This time was spent in
delivering products and in traveling to other individuals’ homes
for evening meetings as well as to monthly meetings and quarterly
“major functions”. In addition, petitioners concentrated on
recruiting downliners, from whom income could be derived
independently from the direct efforts of petitioners, rather than
making direct sales. We find that this factor favors
petitioners.
4. Expectation That Assets Used in the Activity Would
Appreciate in Value
Despite a lack of profit from current operations, a profit
objective may be indicated where a taxpayer intends to earn an
overall profit with income earned from operations together with
the appreciation in the value of assets used in the activity.
Sec. 1.183-2(b)(4), Income Tax Regs. The pole barn constructed
on petitioners’ property was used temporarily in part for Amway-
related purposes. However, this structure was used for Amway
activities only temporarily, and there is no indication that
petitioners intended to realize significant appreciation from it.
We find that this factor remains neutral.
5. Taxpayer’s Success in Other Activities
A profit objective may be indicated where the taxpayer has
in the past taken similar activities and made them profitable
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Last modified: May 25, 2011