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Considering their practice of recruiting only family, friends,
and acquaintances to be downline distributors, petitioners’
goal of achieving a monthly point value of 4,000, which they
considered to be the break-even point, strikes us as unrealistic,
at best. Despite 4 years of losses, petitioners failed to change
tactics to increase the likelihood of earning a profit.
Petitioners had no prior experience in business and no prior
experience as Amway distributors. They accepted the advice of
upline distributors who stood to benefit by petitioners’
participation in an Amway distributorship but failed to solicit
advice from independent business advisers. See Ogden v.
Commissioner, T.C. Memo. 1999-397, affd. 244 F.3d 970 (5th Cir.
2001). When they received unsolicited advice from their
accountant, they rejected it. Petitioners’ restrictive method
of recruiting downline distributors continued from year to year
regardless of the ineffectiveness of that method.
During the years in issue, Jorge Lopez continued his full-
time employment as an engineer. Consequently, petitioners’
ability to maintain their financial status did not depend on the
profitability of their Amway distributorship. It also appears
that a substantial portion of the time petitioners spent on their
Amway activity involved socializing with family and friends.
See Connor-Nissley v. Commissioner, T.C. Memo. 2000-178.
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