J. Michael and Susan Reimer - Page 5




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          Pontiac.  At Village Pontiac Mr. Reimer started as a salesperson,           
          but quickly advanced to finance manager.                                    
          B.   NSA Air and Water Filtration Activity                                  
               As stated above, in 1990 Mr. Reimer became involved with NSA           
          after he lost his job with Recticel Foam Corporation.  Mr. Reimer           
          attended a local NSA seminar that he became aware of through a              
          newspaper advertisement.  NSA marketed air and water filtration             
          devices, and later educational goods, through a direct marketing            
          distributorship similar to the Amway business model.  At first,             
          Mr. Reimer was a distributor for NSA but rose to the next level             
          of sales coordinator.  As a sales coordinator, Mr. Reimer had               
          other distributors below him.  Mr. Reimer conducted local                   
          seminars to sell products and recruit new sales coordinators, and           
          also attended regional and national conferences.                            
               Mr. Reimer recorded all NSA related business income and                
          expenses in an outdated computer system which used 5-1/4-inch               
          floppy disks.  Petitioners upgraded their computers in 1995 and             
          as a result Mr. Reimer no longer has access to his business                 
          records pertaining to NSA on the floppy disks.  Mr. Reimer                  
          reported income and business expenses from the NSA activity on              
          Schedule C, Profit or Loss From Business.  Beginning in late                
          1991, Mr. Reimer decided that he would seek new full-time                   
          employment because he wanted to earn more money but would                   
          continue the NSA activity on a part-time basis.  He obtained                







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