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ability to earn this income let them finance their breeding
activity, and it allowed them to use the activity's losses to
reduce significantly their income tax liability for each year.
This factor favors respondent's determination.
9. Elements of personal pleasure
We consider the personal pleasure derived by petitioners
from conducting their activity. See 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.
Our review of the record, in conjunction with our
observation of petitioners during their testimony, leads us to
believe that they had strong personal reasons for breeding
cattle. Our observation of petitioners testifying at trial leads
to the inescapable conclusion that they each gained significant
personal pleasure from their involvement in the cattle industry,
and that their enjoyment and satisfaction would have been the
same regardless of the activity’s bottom line. See Ballich v.
Commissioner, T.C. Memo. 1978-497. Among other things, we
believe that Mr. Vallette, the backbone of petitioners' breeding
activity, engaged in that activity due to his affection for
cattle. He has been involved with cattle since a very young age,
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