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Mrs. Smith argues that she maintained records consistent
with a business operated for profit, including business plans,
commission reports from the companies whose products she sold,
and 30-day and 90-day sales goal reports, as well as detailed
records of her expenses. Further, Mrs. Smith maintains that when
the products from one company proved unprofitable, she switched
her distribution efforts to other companies which were more
profitable.
Respondent, on the other hand, maintains that Mrs. Smith did
not operate in a businesslike manner because the records lack any
indicia of analysis of the market, the potential for profit, or
how to alter the business to make it successful. Respondent
argues that the records petitioners did maintain were consistent
with someone seeking to substantiate their expenses for tax
purposes and not with the goal of making a profit.
Mrs. Smith cites Dworshak v. Commissioner, T.C. Memo. 2004-
249, in support of her contention that she was operating her
business for profit. The taxpayer in Dworshak, like Mrs. Smith,
was a distributor for a direct marketing company and maintained
records of his activities. Mrs. Smith argues that the records
she maintained were even more detailed than those of the taxpayer
in Dworshak. While Mrs. Smith may be correct that she maintained
more records than the taxpayer in Dworshak, ultimately she misses
the point. As we have stated previously:
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