Ogden v. Commissioner

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 00-60217

MICHAEL A. OGDEN
Petitioner-Appellant,

versus

COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.

No. 00-60220

MICHAEL A. OGDEN; COLLEEN OGDEN,
Petitioners-Appellants,

versus

COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.

Appeals from a Decision of the United States Tax Court

March 20, 2001

Before: FARRIS*, JOLLY, and DAVIS, Circuit Judges.

PER CURIAM:

*
Circuit Judge of the Ninth Circuit, sitting by designation.
Michael A. Ogden and Colleen Ogden appeal the decision of the tax court

denying their petitions for redetermination of federal taxes and imposing an

accuracy-related penalty.2 We have jurisdiction pursuant to 26 U.S.C.

§ 7482(a), and we affirm.

We review for clear error the tax court's profit motive inquiry, see Westbrook

v. Commissioner, 68 F.3d 868, 876 (5th Cir. 1995), and determination of negligence

for an accuracy-related penalty, see id. at 880. Clear error exists when this court is

left with the definite and firm conviction that a mistake has been made. See

Chamberlain v. Commissioner, 66 F.3d 729, 732 (5th Cir. 1995).

We have carefully reviewed the record following skillful and persuasive oral

argument by counsel for the petitioner. We agree that the tax court was not

compelled to enter the findings that it made. Our review, however, is to determine

whether these findings are supported by the record. They are. There is, on this

record, no basis for a firm conviction that an error has been made.

The record supports the finding that the Ogdens' objective was not profit but

to purchase household goods and make financial deductions to offset their wage

income. We therefore affirm the tax court's determination of tax liability. See

2
On April 26, 2000, the court granted the parties' joint motion to consolidate appeals.

2
Westbrook, 68 F.3d at 875-76.

Contrary to the Ogdens' contention, evidence of profit is not determinative of

whether a profit motive exists. See id. at 876 (no single tax regulation factor, nor

the existence of a majority of factors, is determinative of whether a profit motive

exists). There is overwhelming evidence in the record that, if believed, supports a

conclusion that the Ogdens maintained their Amway activity for deductions,

personal pleasure and to offset wages. The tax court did not abuse its discretion in

denying the motion for reconsideration. See id.

The record supports the finding that the Ogdens failed to comply with

provisions of the Internal Revenue laws, failed to exercise due care by continuing

with an unprofitable endeavor, and maintained unbusinesslike records. We affirm

the tax court's imposition of an accuracy-related penalty. See Westbrook, 68 F.3d at

880-81.

AFFIRMED.