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petitioner testified that she hoped to develop a customer base,
she did not explain how she would realize a profit from such a
customer base aside from selling Mary Kay products.
Another important factor is that there is no indication that
petitioner had any chance of ever recovering the losses she
suffered. See Bessenyey v. Commissioner, 45 T.C. 261, 274
(1965), affd. 379 F.2d 252 (2d Cir. 1967); sec. 1.183-2(b)(6),
Income Tax Regs. Petitioner's Mary Kay activity has shown large
net losses in each of the years at issue. Moreover, petitioner
agreed with respondent that she did not assess the profitability
of Mary Kay or analyze any Mary Kay records to determine whether
she could improve her profitability. This suggests that making a
profit was not the primary objective of the Mary Kay activity.
Petitioners have substantial income from sources other than
petitioner's Mary Kay activity. The Mary Kay expense deductions
sheltered that income to a large degree. Only the significant
salary of Mr. Konchar enabled petitioner to incur the losses
generated by her Mary Kay activity.
The Court has considered the remaining factors and finds
them either neutral or unhelpful to petitioner.
The Court finds that petitioner did not engage in her Mary
Kay activity with the actual and honest objective of making a
profit. Petitioner's Schedules C for her Mary Kay activity
indicate that she is not entitled to claim any deductions
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