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the time and effort expended by the taxpayer in carrying on the
activity; (4) the expectation that the assets used in the
activity may appreciate in value; (5) the success of the taxpayer
in carrying on other similar or dissimilar activities; (6) the
taxpayer’s history of income or losses with respect to the
activity; (7) the amount of occasional profits, if any, which are
earned; (8) the financial status of the taxpayer; and (9)
elements of personal pleasure or recreation. Sec. 1.183-2(b),
Income Tax Regs.
No single factor, nor the existence of even a majority of
the factors, is controlling, but rather it is an evaluation of
all the facts and circumstances in the case, taken as a whole,
that is determinative. Golanty v. Commissioner, 72 T.C. 411,
426-27 (1979), affd. without published opinion 647 F.2d 170 (9th
Cir. 1981); sec. 1.183-2(b), Income Tax Regs.
After careful consideration of all facts and circumstances
presented in this case, we conclude that petitioners did not have
an actual and honest objective of making a profit from their
Amway distributorship.
Petitioners did not have any sales experience prior to
becoming Amway distributors. Petitioners relied exclusively on
their upline distributors, who stood to benefit from petitioners’
participation, for advice and training. They did not seek
independent business advice at the beginning of their Amway
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Last modified: May 25, 2011