- 5 - In 1998, petitioner prepared a “Reliv Cold Marketing Budget”, listing anticipated expenditures but showing no projected receipts or profits. He reused this “budget” for each succeeding year. For 2002, this “budget” showed total expenses of $11,145 but no receipts or profits. Until preparing for this trial, petitioner had never prepared a business plan for his Reliv activity, nor had he calculated a break-even point showing how much future profit he would need to recoup his past losses. Petitioner maintained no organized record-keeping system. On Schedules C, Profit or Loss From Business, of Forms 1040, U.S. Individual Income Tax Return, for taxable years 1997 through 2005, petitioner reported net losses from his Reliv marketing activity as follows: Tax Gross Operating Net Year Income Expenses Losses 1997 $233.00 ($2,925.00) ($2,692.00) 1998 688.00 (9,431.00) (8,743.00) 1999 376.08 (9,350.11) (8,974.03) 2000 732.02 (8,833.54) (8,101.52) 2001 1,003.13 (9,967.82) (8,964.69) 2002 1,123.68 (12,894.71) (11,771.03) 2003 1,221.16 (11,629.79) (10,408.63) 2004 1,633.18 (11,834.31) (10,201.13) 2005 1,616.02 (1,616.02) -- In the notice of deficiency, with respect to petitioner’s 2002 taxable year, respondent determined that petitioner was not engaged in the Reliv activity for profit and that consequently hePage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 NextLast modified: March 27, 2008