The taxpayers were entitled to deduct a portion of their house expenses based on the square footage of 1/2 of their basement relative to their house square footage, on the ground that they used that portion of the basement: (a) as a reception area for Amway distributors to wait and collect Amway products each week following delivery to the taxpayers (who were direct distributors), (b) for the storage of Amway products and (c) for filing cabinets. However, the taxpayers' claim that they were entitled to deductions in respect of 1/2 of the space of their two-car garage, on the basis that one of the two cars was primarily used in the Amway business, was found to be without merit in light of the fact that the taxpayers had owned two cars and built the two-car garage prior to becoming involved in their Amway business.
In addition, the taxpayers, in appealing a finding of the Tax Court judge that only 75% of the expenses attributable to one of the automobiles were deductible as a business expense, were found to have failed to have established that 90% of the total mileage was for business use. MacKay J. stated (with reference to the travel log which the taxpayers had prepared, which contained only estimates of the miles that have been travelled on business use) stated that "a taxpayer cannot simply estimate businesses travelled in the hope that this will suffice as an adequate accounting of mileage actually completed in the course of business for which expenses are claimed as a business expense."
Conventions of Amway distributors that the taxpayers attended in the United States for the purpose of developing their leadership abilities and for the purposes of developing motivation, enthusiasm and vision were found to have been incurred for an income-producing purpose.