- 6 - to compete with other Amway affiliates for sales and recruits. Petitioners’ lack of control over their downline distributors hampered their ability to predict sales and, in turn, performance bonuses. Their difficulty in predicting performance bonuses was compounded by Amway’s practice of varying the point value it assigned to a given product. Petitioners’ lack of control over these key components of their distributorship caused any predictions of performance bonuses that they might have made to be, at best, uncertain. Given their practice of selling Amway products at cost, petitioners’ Amway distributorship could be profitable only if their performance bonuses exceeded their expenses. In order for this to occur, petitioners estimated that they would need to achieve and maintain a monthly point value of 4,000. However, petitioners had not actually made this determination for themselves; rather, they relied on statements to this effect by other Amway distributors and hypothetical examples in Amway brochures. During the years in issue, it appears that petitioners’ point value did not exceed 372 in any given month. As noted, petitioners filed a timely joint Federal income tax return for each year in issue. Included with each return is a Schedule C, Profit or Loss From Business. Petitioners’ Schedule C for 1998 lists their principal business as “Amway Sales and Distribution”. For 1999, petitioners’ Schedule C listsPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next
Last modified: May 25, 2011