- 8 -
absence of any efforts on the part of Mr. Berryman to locate
these prospective customers other than by word of mouth.
The one financial success, at least before respondent caught
on, that petitioners enjoyed with their Melaleuca activities was
offsetting their losses against wages of $95,824, $91,662, and
$103,693 for 2002, 2003, and 2004, respectively, to create
substantial tax savings. Of course, this itself is an indication
that petitioners were more interested in the tax savings realized
by converting personal expenses into tax deductions than they
were with operating a business for profit.
In sum, we are satisfied that petitioners’ primary purpose
for engaging in the promotion of Melaleuca products was not to
profit. Accordingly, petitioners are not entitled to the
deductions here in dispute beyond those allowed by respondent
under section 183(b).
B. Petitioners’ 2002 Home Mortgage Interest Deduction
Respondent also adjusted the home mortgage interest
deduction claimed by petitioners in 2002 by $1,462 for lack of
substantiation that they paid such interest. Section 163(h)
allows a deduction for interest paid on a qualified residence.
Sec. 163(h)(2)(D). “Qualified residence” within the meaning of
section 163 may be either the taxpayer’s principal residence or
another residence selected by the taxpayer and used as a
residence. Sec. 163(h)(4)(A)(i). As with any deduction,
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: November 10, 2007