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year. Although petitioner was a “middle-class taxpayer” whose
losses were "actual", we are not persuaded that his motive for
operating the store during the years involved here was to make a
profit. He derived a personal benefit from the store in part
because his mother was able to spend her leisure time there. If
petitioner were truly profit motivated, we expect that the
store's recurring losses would have persuaded him to change his
business practices. Instead, petitioner continued to spend more
money and incur additional losses. Regardless of his income
level, we doubt that he would willingly engage year after year in
this unprofitable activity unless he had a motive other than
profit. We infer that he kept the store open because he and his
mother received benefits from operating it independent of its
ability to earn a profit.
9. Elements of Personal Pleasure
We consider the personal pleasure derived by petitioner in
conducting his activity. Sec. 1.183-2(b)(9), Income Tax Regs.
Although the mere fact that a taxpayer derives personal pleasure
from a particular activity does not negate a profit intent with
respect thereto, the presence of personal motives may indicate
that the activity is not engaged in for profit. This is
especially true where there are recreational or other personal
elements involved. Id.
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