Friday, February 19, 2016

Amway IBOs Think Tax Refunds Are Profit?

One of the things that I have observed over the years is how IBOs are so misguided by their upline. One good example if how they think that their business losses, which result in a tax refund is somewhat like a profit, or that they are getting a free pass with the government footing the bill for their standing orders and functions. In the past, IBOs have been audited and had many business deductions disallowed because the tax department ruled that they were not truly running a business, but participating in a hobby called Amway. Only legitimate business expenses can be deducted.

I believe that most IBOs are deducting the cost of their training materials on their taxes, but the issue at hand is whether the training materials are resulting in increased sales for your business. If you are running a "buy from yourself" business, then there is a strong possibility that your expenses may not be valid deductions come tax time. If you are not selling products to customers for a profit, then there is a chance that your expenses are not valid deductions. It would be sad indeed to be audited at tax time a few years after you have been an Amway business owner, only to find out that your expenses are not valid and that you may owe tens of thousands of dollars in back taxes.

Another apparently common mistake of IBOs is to think that their business expenses are basically free from the government because they may end up with a tax return. Your expenses are deductible from your taxable income. Thus if you had $10,000 in business expenses, your return would depend on your tax bracket. If you are in the 15% tax bracket, then $10,000 in expenses would get your about a $1,500 tax return, depending on what other deductions you may have. But IBOs get duped into thinking they made a score and now get back $1,500 when they may not have had a refund in the past. Obviously in this case, the IBO clearly would have been better off saving the $10,000 and never getting involved in Amway. Some IBOs proudly proclaim their refunds as basically a windfall, almost like it is a profit. That is truly scary thinking and one that does not add up.

Folks, there is no free ride. If you are spending money on legitimate business expenses with an intent to make a profit, then there is nothing wrong with that. But if you are traveling to conventions hoping to learn the secret of sponsoring more downline, you could be walking on thin ice should the IRS ever decide to audit your business. There have been many cases in the past where not only did IBOs lose their shirts due to the business support materials they purchaed, but they got double whammied later when the IRS disallowed tax deductions, leaving them in financial ruin. I truly hope you aren't on that path.

Check out this link:
http://www.apollowebworks.com/amway/irs.html

"TRAVEL AND ENTERTAINMENT have always been areas of abuse. Sections 162, 262, and 274 are always applicable and sometimes Section 183. Since most of the travel is primarily to attend social gatherings for entertainment and motivational purposes, any real business purpose is suspect. Unless the taxpayer can show that attending seminars, meetings, etc., meets the requirement of Section 162, the travel should be disallowed. Amway people have been unable to show that attending these meetinqs increased their sales. The agendas of these meetings appear to be primarily for entertainment, socializing, and listening to motivational speeches. The meetings have nothing to do with promoting the sale of Amway products to the general public. In fact, Amway distributors are specifically warned aqainst mentioning either Amway or selling when recruitinq potential downline people. Since it is not likely that the taxpayer will increase his sales by attending these functions, then there is not a reasonable business purpose for the trips"

63 comments:

Anonymous said...

Only real businesses are allowed to have tax refunds. No real business wants to have successive losses for long periods.

In the government's eyes, tax refunds are there to reduce losses for real businesses and it's just an incentive for businesses to be more competitive.

Joecool said...

What's sacry is that the IBOs think they are making a profit because they receive a refund when in reality, they are losing big money which is why they get refunds, due to business losses.

Anonymous said...

First of all don't use IBO as generic for all of the IBO's...
Every IBO ship is a biz, Refer to iboai.com for Tax guidelines for North American IBO's.
As an FYI, we have lot of CPA,CA,CFA,CGA's & other Financial & Tax related professionals as IBO's.

Investing in yourself(by education) is one of the best investment one can do.. In this opportunity choice is upto each IBO to decide on that.

Anonymous said...

Try asking your upline for an advice when you are being audited and see what happens.

Anonymous said...

They are also misguided with their title as independent business owners. They think they are running a business like a pro.

Joecool said...

Your upline willl say it's your own fault or that you didn't follow their advice "exactly".

Joecool said...

And IBOs are anything but independent. Your upline is like a boss and you are still at Amway's mercy for most things.

Joecool said...

Investing in IBO "education" isthe reason why 99% of these IBOs end up with net losses. The teaching is ineffective, it does not result in increased sales.

Anonymous said...

Become an educated and empowered IBO, your Upline is also a human being who is sharing the experience he/she has and you as IBO have access to lot of successful IBO's and your Business Reference Guide....
Independent in terms of what they want to do with the platform/opportunity Amway offers..

You guys needs to learn more about "Direct Selling" Industry , as otherwise by default are part of "Indirect Selling".
And here are some industry organization that can help-- www.dsa.org; www.dsef.org

Joecool said...

The real problem is that Amway is a front. It's a front to use Amway to sell the tools and functions. Just like the mafia would use the italian restaurant to do business in the dining booths.

Anonymous said...

Amway is a platform that is same for each IBO, if you have your own way of developing a team of pro-Sumers and keep the community of entrepreneurs together, go ahead do it...
Those tools are used to educate,empower those who want to ... You know of any school to teach entrepreneurship?

Anonymous said...

Read the business reference guide and you will see in a small print that less than 1% will make money.

Anonymous said...

Once again, notice the typical weasel-word "empowered" in this guy's post. How the hell are you being "empowered" by Amway, a company which bleeds you dry of funds for useless products and functions and tools every month?

Direct Selling? Gimme a break. Amway is about Direct Exploitation.

Joecool said...

The prosumer term is a crock. It's a way of having a group of self consuming IBOs because the product cannot stand on its own. If Amway products could stand on its own, you would sell it to consumers and make money. There would be no need to have prosumers.

The prosumers just make it a closed market product pyramid.

Joecool said...

Empowered sounds nice. But seriously an IBO is someone who pays Amway for the privilege of taking all the risk and expense of moving Amway's products. What makes it worse is that you mist move a quota to earn a bonus from Amway. You would be better off shopping with a credit card that pays cash back.

Anonymous said...

Again, notice: the guy simply can't help using the weasel-words of Amway propaganda: "empowered," and "pro-sumer." This is textbook cult strategy: make sure your trained zombies always parrot the same cultish vocabulary.

Anonymous said...

Yeah, I know of several hundred business schools in the United States alone. They all teach entrepreneurship.

I have a hot flash for your, Anonymous of 3:15 AM. When you're in Amway you are NOT an entrepreneur. You're a silly, exploited sales rep.

Joecool said...

Prosumer is just a made up buzzword by Amway apologists. I looked it up and here's the definition: """A prosumer is a person who consumes and produces media. It is derived from "prosumption", a dot-com era business term meaning "production by consumers"."""

Joecool said...

Yes, Amway IBOs are not entrepreneurs. They are commission only sales people with no fringe benefits. The IBO takes all the risk for Amway by using their efforts, time and expense to move products for Amway. They get nothing from Amway unless they move a 100 PV quota.

And with Amway's annual fee, you are paying for the honor of taking the risk for Amway.

Anonymous said...

Listen to Podcast And learn about Free Enterprise and how Amway offers platform for people to achieve what they want to Leveraging technologies...

http://www.forbes.com/sites/jacobmorgan/2016/02/16/entrepreneurship-in-the-age-of-the-freelancer-economy-a-conversation-with-president-amway/

Anonymous said...

Good God, will the jargon never end? What the bloody hell does "leveraging technologies" mean?

It's this kind of fake, incantatory language that Amway uses to mystify its operations, and make them sound more important and more complex than they actually are. It's more of the same Alvin-Toffler dream-world fantasy.

Joecool said...

The Amway business at its simplest form is to buy sell and sponsor downline. The Amway defenders obfuscate and make the entire process so complicated and confusing. Even figuring out the Amway bonuses can be convoluted.

Anonymous said...

Simplest form it is to find out why you would buy a product from your own e-mall and educate & empower others do the same..

I can sense you guys are feeling lost (don't worry we have lot of cases where folks come back and join as their understanding of business model improves) ...hopefully you can channelize your efforts to learn and join to start building your biz on the platform Amway offers, and realize what the opportunity is all about-"People Helping People Help Themselves", some more to help you folks--
http://www.denverpost.com/ci_23644089/can-free-enterprise-boost-economy-yes

http://www.achievemagazine.com/patriotism-burnett

Joecool said...

Who would want to join Amway where .26% make platinum (about 1 in 400) and that's approximately the break even point? You are better off being a smart shopper looking for good deals and using a cash back credit card to make purchases.

Anonymous said...

Over 3 million and growing... As the smart shopper become intelligent too, which leading to other over 75 other brands(In North America) to come and join to offer more Value to the customers.
You are forgetting when you look for "deals" by "indirect distributors", you promote their biz, we don't have to look for deals as we start from where customer choices end as for cash back credit card,well we do have them and we can even offer to our customers((in NA), and help them not just get cash back also help them and offer opportunity to make too...
GOD Bless You and Hope you get the wisdom to understand the opportunity for your future and via you can help others in your social network.

Anonymous said...

Joe, it looks like the guy can't help himself. The jargon has seized control of his brain, and there's no hope for him now. Consider:

1. "educate & empower"
2. "channelize your efforts"
3. "People Helping People Help Themselves"
4. "building your biz"
5. "the platform Amway offers"

We just have to feel sorry for someone whose speech patterns have been reduced to this level of bullshit-spouting.

Anonymous said...

To Anonymous of 5:29 PM:

The one who is "lost" is YOU. The business model of Amway is simply a fraud and a cheat that steals money from down-line in order to enrich cynical scum in up-line. In the United States people are figuring that out, which is why you are losing 10% of your business every year.

And if you post an answer to this, please try to write in English, and not in zombie jargon about "prosumers" and "leveraging technologies" and "channelizing efforts" and "empowering people." Got that, pal?

Joecool said...

So how much money have you made by "presuming" Somehow I think your Amway business has a net loss because of your Amway "education".

Joecool said...

Perhaps the Amway folks need confusing jargon because if they use simply language, they won't be able to fool anyone into thinking Amway is a viable idea.

Anonymous said...

You so far have failed to realize you are in a way "down line" to "indirect" sellers you currently buy products from, who keep the profit and leverage your time & verbal (and digital nowadays) marketing to build better choices for their generations to come and wont offer that Opportunity to you to be like them..

Amway is not like Walmart (retailer) or like Costco(wholesaler) , Amway has distribution centers and everyone can use technology to go DIRECT to distribution center and buy and educate others to do the same .

Joecool said...

Amway IBOs like to be "duplicate-able" but all that means is you are losing money building Amway and getting others to do the same thing,

Anonymous said...

You seems naive, it's not duplicateable.. If that's the case the first IBO who started would have been copied, which is not the case.. Every "I" has opportunity to grow as per the potential they see..

You lost money doesn't mean 3 million other distributors are loosing money too... Don't go too far just Check official social media pages of Amway.

May GOD grant you wisdom to understand difference between Direct & In-Direct Selling.

Anonymous said...

To Anonymous at 2:33 PM:

If what you say is true, then anybody who has ever sold anything to anyone, in the entire history of the world, can be considered "up-line," and the person buying can be considered "down-line."

Don't you see the absurdity of your position? You're simply saying that Amway is a buying and selling business, like every other retail enterprise that has ever existed. Both parties in a sale believe that they have profited -- the seller by getting his price, and the buyer by getting what he wants or needs.

There is absolutely NOTHING about Amway and its fake "opportunity" that is any different from any other retail sale. It's just that you deceive people into thinking that there's more involved in it, and that taking part in Amway will somehow make the participants rich.

That is a LIE, and you know it. The only purpose of Amway is to enrich up-line, and to convince ignorant people to take part in the fraud. Bullshit about "leveraging technology" is pure window-dressing that won't change the facts.

Joecool said...

Amway IBOs fool themselves into thinking they are legitimate business owners but in the end, they are putting lipstick on a pig.

Joecool said...

In Amway, tens of millions and more have lost money with only a small percentage actually making decent money. Amway's own stats bear this out.

IBOs think they are duplicating but they are duplicating losses that the vast majority wind up with after their Amway days are over.

Anonymous said...

Please explain those who are making, how they are making money?

Joecool said...

The ones making money have a lot of downline and they sell them cds and functions. That's where the real money is.

Anonymous said...

Not really in indirect selling industry as "downline" you don't get opportunity..so don't have the opportunity.
Every biz is buying & selling-- you need to think why business owners buy from their own and don't go out and buy from another in the same industry.
You are mis-informed if you think you will get rich by joining the business, (similar to losing weight by joining the gym)...you have to work to get the results you want.
Same products for all IBO's , it's their belief and faith that is individual.

As for Upline, well again you are mis-informed, no one can keep Upline in biz, nor can keep any downline in biz unless they individually decide to work together as team...
And who is stopping you from becoming Upline?...



Anonymous said...

Isn't that "prosuming" promotes the biz of your upline?

Anonymous said...

To Anonymous at 3:30 PM:

Do you actually suggest that "the official social media pages of Amway" are an unbiased source of information? Can you really be that naive? Do you seriously think that such pages would print anything that is in any way critical of Amway?

May GOD grant you the wisdom to get the hell out of Amway before you become a broke loser, like 99% of those who got into the scam.

Joecool said...

Yes, let's ask Amway if Amway is a good idea. But Amway doesn't advertise residual lifelong income either.

Joecool said...

That's just it. The work is irrelevant. Do you think 99% of IBOs do not work? They work but Amway is a flawed system. The vast majority fail because that's how the system is designed.

Joecool said...

Yes, presuming promotes Amway and your upline's business more than your own.

Anonymous said...

Educational tools as BSM(Business Support Materials), which are optional are not from Amway, you are again missing the question... How Platinums,emeralds, diamonds make money which Amway distributes based on performance (not when one join the business).

Joecool said...

Based on performance? So someone who's charismatic and good at lying is able to build a downline of 1000 or more people. These 1000 people move enough volume to qualify the guy on top as a diamond. They believe the lies that anyone and everyone can go diamond so they faithfully move 100 PV and buy cds, book and functions.

The guy on top the pyramid makes diamond money from Amway, but even more profitable is selling cds, books, voicemail and seminars to 1000 faithful downline.

Anonymous said...

Read the BSM and you will see in a fine print that less than 1% will make money.

Anonymous said...

The person on top of pyramid is CEO in a traditional company, here it is performance based, you can be leader of your organization and everyone in your team has same opportunity...

Shows your immaturity to understand the business model that in this day and age when people can go DIRECT to company's website and learn more that they are made to believe and all of them are "forced" to do volume in their business (instead of indirect distributors)...

Find out WHY they believe and WHY they are faithful to their own business.

I now feel sorry for you and your lack of understanding of the business(even though you claim you did 4000PV, I hope you know how many PV are required for Platinum,Emerald and Diamond level).

Here is a book that is written about folks like you--
http://www.goodreads.com/book/show/1610050.WWW_Stands_for_World_Wide_Whiners

Anonymous said...

To Anonymous at 5:33 PM:

Those so-called "educational tools" are definitely NOT optional in Amway! If you decline to purchase them, your up-line will not help you or advise you. Where have you been? This has been testified to by scores of former IBOs, here and at other websites.

Joecool said...

The tools are defacto required. i.e. "Tools are optional but so is success". What is a new IBO supposed to think?

Joecool said...

The difference between a CEO and a diamond is that a company run by a CEO, even the lowest guy in the organization such as the janitor, gets a paycheck and has money to pay his bills and buy food.

That is not the case with Amway. The diamond gets volume bonuses generated by downline, and they sell cds and functions to downline. The downline are paying for the privilege of serving the diamond and Amway.

Of course you want to call me a whiner because the information I am sharing about your scam is not helpful to you.

Your statement about performance is BS. I'll bet many downline do more PV than the diamond but the diamond is higher on the pyramid so the diamond makes more money.

Anonymous said...

Joe, you have hit the nail on the head. In a regular business firm, EVERYBODY gets paid for his labor! No matter who you are or what position you occupy, you are going to get a paycheck, whether it be large, middling, or small.

In Amway, everybody works, but only a tiny percentage of savagely competitive attack-dogs will claw their way to "Diamond" status. They'll be the only ones to profit at all! Everyone else in the organization will lose money. Amway freaks call this "a business opportunity." Yeah, sure -- like the "opportunity" that twelve starving men have when fighting over one piece of bread.

Here's the unvarnished truth -- despite all its fake Christianity and God-talk, Amway is a Social Darwinist organization. It believes not only in the financial survival of the fittest alone, but also in the utterly amoral bleeding of weaker IBOs in down-line to make the survival of the fittest possible. That's why it's appalling when that lying scumbag De Vos talks about "compassionate capitalism." What's compassionate about only letting the most savagely competitive members of your organization see a real profit?

Maybe being willing to rip off those who are struggling in your down-line is what these Amway freaks call "the entrepreneurial mindset."

Joecool said...

What is interesting is that the diamonds will say that Amway is a level playing field, which is BS. It's not level when only a few profit from the tools and only a few actually profit from product volume.

The diamonds say what they need in order to keep the downline rubes from quitting.

Anonymous said...

CEO is an employee only unless he is a founder of the company himself, who works the most and get paid fixed irrespective of performance?, unlike in this business opportunity.

Diamond is 6 platinum legs in different LOS ... If an IBO has 1 leg or more and have more PV than a diamond has in 6 different LOS, Then it's IBO fault and lack of understanding of the business plan..
How you explain this--
https://twitter.com/amwayus/status/702215091253440513

Will appreciate if you first read the books(get from library as these "tools" can cost money, investment in education is income or expense depends on mindset) and links I post before making comments..

Joecool said...

So your link shows a diamond (crown) named Gordon Ross. He's been a diamond since 1973. So he's been on top of the pyramid a long time. What exactly is your point?

Anonymous said...

You don't understand the business plan yet, so no point going further..
Just FYI every organization is a pyramid,difference you need to learn is what made it legal or illegal..
Go to DSEF.org and learn more about it.

Joecool said...

You obviously don't know the difference between an organizational hierarchy and a pyramid scam.

Anonymous said...

For your Education---
http://www.dsef.org/wp-content/uploads/2015/03/DSEF-Consumer-Protection-Toolkit.pdf#page16

Anonymous said...

I think the one who is immature is someone who wastes time spouting BS jargons and thinks that the biz is about "empowering" people.

You are right, Joe.

Joecool said...

Your link didn't work. Just like the Amway business.

Anonymous said...

Works for me both of them :)... That only proves something is not right on your side.
Anyhow, hope you are smart enough to type it and read.

Joecool said...

Doesnt matter. Your link is just a way to defend a really poor business opportunity. It's actually funny that you can try to defend it when Amway's own stats shows that only a fraction of 1% succeeds.

Anonymous said...

I think the one who is immature is not you Joe, it's the one who is defending a fake "opportunity" that is immature.

You're right after all, Joe......

Joecool said...

It's funny that someone who cannot properly evaluate a business and business plan (such as Amway) is telling me I need to educate myself. LOL