William C. and Dorothy M. Smith - Page 24




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          purchase products at a discount as well as claiming business                
          expense deductions for personal expenses.                                   
               We find this factor to be neutral.  In part, Mrs. Smith                
          enjoyed personal or recreational benefits by engaging in this               
          activity.  The record suggests that some of her downline                    
          distributors were her friends long before their business                    
          involvement with Mrs. Smith.  In one case, Mrs. Smith even lent             
          $12,000 to a friend in the same year he became a downline                   
          distributor for Renaissance.  Further, many of Mrs. Smith’s                 
          activities included elements of personal recreation, including              
          traveling to different cities and enjoying meals with friends.              
          Finally, Mrs. Smith enjoyed the benefit of being able to claim              
          business expense deductions for personal expenses such as her car           
          and home.                                                                   
          There were, however, elements of these marketing activities                 
          which seem to lack any indication of personal recreation,                   
          including placing advertisements in newspapers to recruit                   
          downline distributors and responding to the resulting phone calls           
          inquiring about these opportunities.  Thus, we find this factor             
          to be neutral.                                                              
               10.  Conclusion                                                        
               On balance, we find that Mrs. Smith was not engaged in her             
          direct marketing activities with an actual and honest objective             
          of making a profit.  We do not lose sight of the fact that one of           







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