19
Substantial income from other activities, particularly where
the losses from the activity produce a tax benefit, may indicate
a lack of profit objective. Sec. 1.183-2(b)(8), Income Tax Regs.
Petitioners reported gross income from the medical corporation of
$479,500 and $498,521 for 1989 and 1990, respectively, while the
farm losses for those years were $135,742 and $117,420. There
was no convincing reason to combine the two activities other than
to save taxes. This factor favors respondent.
9. Elements of Personal Pleasure or Recreation
The presence of recreational elements may indicate that an
activity is not engaged in for profit, although the mere fact
that personal pleasure is derived will not be sufficient to cause
the activity to be classified as not engaged in for profit if
other factors indicate that the activity was in fact engaged in
for profit. Sec. 1.183-2(b)(9), Income Tax Regs. Petitioner
admits that he enjoys his work on the ranch, as well as training
and riding polo ponies, but he argues that if he wanted the ranch
for purely recreational purposes, he could have built a more
elaborate ranch with more frills, as opposed to a working ranch.
We think that the fact he could have built a ranch with more
frills does not negate the recreational quality present. This
factor favors respondent.
___________________________
Of the nine factors discussed above, only one factor favored
petitioner. Additionally, the objective facts presented to this
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