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documents on which they intended to rely at trial, and refused to
participate in the stipulation process contemplated by Rule 91.6
Trade or Business
According to petitioners, their Amway activity, at all
relevant times, was a trade or business. Therefore, petitioners
argue, the expenses they incurred in carrying on this activity
should be allowed as deductions. See sec. 162(a).7 Respondent
argues that petitioners were not carrying on a trade or business
because they lacked the requisite profit objective, and
petitioners are not, therefore, entitled to the deductions
they claim, except to the extent allowed by section 183.8
6 Petitioners explained that their refusal to cooperate with
respondent’s counsel was caused by their mistaken beliefs that
(1) they elected to have this case heard as a small tax case
pursuant to sec. 7463, and (2) the parties in a small tax case
are not required to meet in order to properly prepare for trial.
7 In general, sec. 162(a) allows a deduction for the
ordinary and necessary expenses paid or incurred during the
taxable year in carrying on any trade or business.
8 In relevant part, sec. 183 provides:
SEC. 183(a). General Rule.–-In the case of an
activity engaged in by an individual or an S
corporation, if such activity is not engaged in for
profit, no deduction attributable to such activity
shall be allowed under this chapter except as
provided in this section.
(b) Deductions Allowable.–-In the case of an
activity not engaged in for profit to which subsection
(a) applies, there shall be allowed--
(continued...)
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