- 16 -
and substantial profits. Although there had been a market for
petitioner's services in 1978 through 1981, the decline in oil
prices in 1986 resulted in a general economic decline with a
correlative reduction in construction activity during the period
after his return to Alaska, which obviously had an adverse effect
on petitioner's ability to obtain drilling contracts.
Petitioner admits that he enjoys working on his equipment.
While petitioner's drilling activity included recreational and
personal elements, we do not find that those aspects outweighed
petitioner's profit objective. A taxpayer's enjoyment of an
activity does not demonstrate a lack of profit objective if the
activity is, in fact, conducted for profit as shown by other
factors. Jackson v. Commissioner, 59 T.C. 312, 317 (1972); sec.
1.183-2(b)(9), Income Tax Regs.
Petitioner expended a great deal of money renovating his
drill rig. We do not believe that petitioner would have embarked
on such a time-consuming, costly, labor-intensive venture without
a profit objective. The fact that petitioner derived a level of
personal satisfaction from working on the equipment does not
belie his underlying profit objective. Sec. 1.183-2(b)(9),
Income Tax Regs.
Although petitioner's records of his drilling activities and
efforts to find work for the rig left much to be desired, the
absence of accurate books and records does not conclusively
establish the lack of a profit objective. See Farrell v.
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