One of the big challenges facing multi level marketers is getting the respect they deserve. Not only from friends and family, but from the tax court as well.
In years past, the tax court has disallowed deductions claimed by MLM'ers under the theory that they weren't actually engaged in business, and that their activities had a large amount of personal "benefit". Kind of makes you wonder if your job is supposed to always be a dreadful day at the salt mines.
In the case of ROBERT D. AND CAROL A. BERRYMAN,.COMMISSIONER, the Tax Court had a fairly easy decision to make.
The Berryman's claimed losses of $ 49,590, $ 45,114, and $ 67,738 for 2002, 2003, and 2004 tax years. Deductions included cat litter????? Tickets to Oklahoma State games, and Dish TV.
Seriously guys, you can only take deductions for business activities, sure you might be able to write off that hotel room that your family used on your business trip, but cat litter? This brings up the age old phrase about hogs getting slaughtered.
Great point brought up by the court. If you were running losses of $50K+ a year, would a reasonable person continue to run that "business"? Simple answer, no.
Once again, MLMs can be a great opportunity to increase your income and receive some tax advantages at the same time, but you have to treat it like a business.
