Randall B. and Kay F. Ollett - Page 7

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          Loss From Business:                                                         
             Year      Gross Income     Total Expenses      Net Losses                
             1996            $10           ($1,625)          ($1,615)                 
             1997            357           (13,177)          (12,820)                 
             1998            625           (17,504)          (16,879)                 
             1999          1,450           (17,384)          (15,934)                 
             2000          3,235           (23,001)          (19,766)                 
               Total       5,677           (72,691)          (67,014)                 
          The parties also stipulated that petitioners reported continuing            
          losses from their Amway distributorship on their tax returns for            
          2001 and 2002.                                                              
               For the years in issue petitioners’ expenses from their                
          Amway activity were as follows:                                             
                                           1999       2000                            
          Expenses                                                                    
            Advertising                     $514       $290                           
            Car and truck expenses         6,618      8,504                           
            Depreciation expenses             55        351                           
            Office expenses                1,609      1,102                           
            Supplies                           0      4,408                           
            Travel                         2,878      2,831                           
            Meals/entertainment              817      1,111                           
            Utilities                      1,322      3,598                           
            Other Expenses                                                            
              Books and training aids      3,571         96                           
              Professional membership    0       710                                  
            Total                        17,384      23,001                           
               A substantial portion of petitioners’ Amway expenses was               
          incurred in their traveling to various locations throughout the             
          country to attend meetings and seminars hosted by the Florence              
          organization.  Petitioner generally described these meetings as             
          training functions that petitioners attended to learn techniques            
          for building a successful network from instruction by his upline            






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