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profit, especially where there are recreational or personal
elements involved. Sec. 1.183-2(b)(9), Income Tax Regs. In his
testimony, petitioner described the orchard in terms of how it
relates to petitioners' house. He described how the trees are
planted right up to the house, and how the air is filled with the
perfume of the blossoming trees. It is clear from petitioner's
testimony that petitioners planted the orchard with the intent of
living in a house nestled among flowering trees, and that they
derive great personal pleasure from living in the idyllic setting
they created.
An activity will not be treated as not engaged in for profit
merely because the taxpayer derives personal pleasure from
engaging in the activity if the activity is in fact engaged in
for profit as evidenced by other factors. Id. The record in
this case, however, is entirely bereft of any evidence that
petitioners engaged in the activity with an honest and actual
objective of making a profit. Thus, we find that this factor
weighs against petitioners as personal pleasure is the dominant
factor in their undertaking the activity.
Accordingly, on the basis of all the facts and circumstances
of the instant case, and the factors considered in section 1.183-
2(b), Income Tax Regs., we find that petitioners did not have an
actual and honest objective to make a profit with respect to the
organic apple orchard activity within the meaning of section 183.
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