- 15 -
operation of Silk Oak have been de minimis when compared to the
$145,510 in expenses incurred. Bischoff v. Commissioner, T.C.
Memo. 1995-34. Accordingly, this factor favors respondent.
8. The Financial Status of Petitioners
The fact that a taxpayer does not have substantial income
from sources other than the activity may indicate that the
activity is engaged in for profit. Sec. 1.183-2(b)(8), Income
Tax Regs. In this case, petitioners' income from their nursing
supervisory activities totaled $105,992 in 1991 and $133,572 in
1992. Petitioners' income is sufficient to produce a comfortable
standard of living, even upon consideration of the losses
incurred in the operation of Silk Oak. Golanty v. Commissioner,
supra. We also note that the losses reported from the operation
of Silk Oak provided petitioners with substantial tax benefits.
Id. at 429. This factor favors respondent.
9. The Elements of Personal Pleasure or Recreation That
May Be Present
The presence of personal motives in carrying on an activity
may indicate that the activity is not engaged in for profit,
especially where there are recreational or personal elements
involved. Sec. 1.183-2(b)(9), Income Tax Regs. The existence of
personal pleasure for the taxpayer, however, does not compel a
finding that the activity was not engaged in for profit. Jackson
v. Commissioner, 59 T.C. 312, 317 (1972). Conversely, the
existence of hard work is not enough to distinguish a profit-
seeking activity from a hobby. Borsody v. Commissioner, T.C.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011