- 11 -
Sears. The RTP package does not discuss the size of the market
in Oroville, the median income level of its inhabitants, or any
other information specific to Mr. Sears’s circumstances.
Instead, it contains vague statements such as “Our [RTP]
marketing strategy is to aggressively promote the Tax Relief
System, our products, and our overall business opportunity on a
nationwide basis”.
The 1-page document signed by Mr. Sears is equally devoid of
meaningful content. It states that Mr. Sears intends to make 18
sales per month, eventually creating a downline distribution
network of 3,000 people and “residual monthly income in excess of
$9,000.00”. It does not discuss the segments of the market he
intends to target, the types or amounts of expenses he expects to
incur, or how he will overcome the time constraints imposed by
his full-time job. In sum, any positive inference we might draw
from the written business plan is outweighed by the absence of a
plausible strategy for earning a profit.
Finally, there is no indication that Mr. Sears attempted
changes to improve the activity’s profitability. Mr. Sears
testified that he performed a break-even analysis, concluding
that he would need “a substantial number” of downline
distributors to break even. Nevertheless, it does not appear
that he tried to reduce his expenses or develop new recruiting
methods. This factor does not support petitioners’ claim of a
profit objective. See sec. 1.183-2(b)(1), Income Tax Regs.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011