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objective does not depend merely upon the number of factors
satisfied. See id. As discussed above, petitioners bear the
burden of proof. See Rule 142(a); Welch v. Helvering, 290 U.S.
111, 115 (1933).
After careful consideration, we are not persuaded that
petitioners’ primary purpose for engaging in the sale and
distribution of Amway products was for income or profit. The
manner in which petitioners conducted their Amway activity
virtually precluded any possibility of realizing a profit. Cf.
Elliott v. Commissioner, 90 T.C. 960, 971-973 (1988), affd.
without published opinion 899 F.2d 18 (9th Cir. 1990). For
example, petitioners freely incurred expenses with no realistic
plan for how they might recoup those expenses. Although
petitioners maintained detailed records for certain aspects of
their distributorship, the records apparently were kept merely
for substantiation purposes rather than for use as tools to
increase the likelihood of profit. See Hart v. Commissioner,
T.C. Memo. 1995-55; Poast v. Commissioner, T.C. Memo. 1994-399.
Furthermore, petitioners did not maintain the type of records
indicating that they had, for example, analyzed and confirmed the
existence of a potential market for their activity; established
how long it would take to recoup losses incurred during the early
years of their activity; or determined what level of sales would
be necessary for their activity to become profitable.
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