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other court, and this opinion shall not be treated as precedent
for any other case.
Petitioners operated a purported home-based business as
marketers for a direct marketing company. Respondent determined
deficiencies of tax of $11,824, $7,845, and $13,983 for tax years
2002, 2003, and 2004, respectively. Respondent also imposed
penalties of $2,364.80, $1,569, and $2,796.60 for 2002, 2003, and
2004, respectively. Because petitioners’ marketing activities
were not for profit, and because petitioners failed to
substantiate part of their 2002 home mortgage interest deduction,
we sustain respondent’s determinations.
Background
Some of the facts have been stipulated and are so found.
Petitioners are husband and wife and resided in Tulsa, Oklahoma
at the time their petition was filed. Petitioners are both
employed full time, Mr. Berryman with the Cimarron Telephone Co.
and Mrs. Berryman as a teacher in a local public school system.
Beginning in 1992, petitioners became involved with a
company called Melaleuca, Inc. Melaleuca is a direct marketing
company which sells a line of health and wellness products.
Melaleuca calls their distributors marketing executives. As
Melaleuca marketing executives, petitioners agreed to purchase a
certain volume of Melaleuca products which they received at a
discount. Petitioners could then earn commissions by recruiting
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