- 21 -
These losses are on top of the losses of $34,049 and $47,493 for
1998 and 1999. In total, from 1998 to 2002, Mrs. Smith reported
losses from her direct marketing activities of $159,809.
Mrs. Smith maintains that while she sustained losses during
the years at issue, these losses should be considered startup
losses because of the unforeseen circumstances that necessitated
finding new companies to sell for. Mrs. Smith further asserts
that her business broke even in 2003 and returned profits in both
2004 and 2005.
We are not persuaded that Mrs. Smith’s history of losses
should be discounted as startup losses because she had to switch
companies for which she sold because of unforeseen circumstances.
First, the unforeseen circumstance with respect to Mrs. Smith’s
ceasing to sell for Renaissance was Renaissance’s having been
shut down by the Kansas State authorities. Further, we find that
characterizing these losses as being startup in nature is not
supported by the record. Mrs. Smith moved from company to
company without any apparent analysis of the costs associated
with selling for a new company or how long it might take to
recoup those costs. In short, we find these losses were
operating losses.
Nor are we persuaded by Mrs. Smith’s assertion that her
business is now profitable. While Mrs. Smith reported on her
Schedules C that she broke even in 2003 and had small profits for
Page: Previous 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Next
Last modified: November 10, 2007