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Income Tax Regs.7 Petitioners had income from petitioner
husband's primary profession as an engineer. The losses with
respect to the farming venture allowed petitioners to shelter
their outside income.
Elements of Personal Pleasure. 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. Respondent argues that there
were elements of recreational and personal pleasure present in
this case. In particular, respondent points out that
petitioners' children participated in the 4-H Club program.
Petitioner wife performed the majority of the farming work on the
Pescadero property and did not enjoy working with the animals on
the ranch.
Ultimate Conclusion
We hold that petitioners’ farming activity was not engaged
in for profit within the meaning of section 183 for the taxable
years 1991, 1992, and 1993.
7 The regulation provides:
Substantial income from sources other than the activity
(particularly if the losses from the activity generate
substantial tax benefits) may indicate that the
activity is not engaged in for profit especially if
there are personal or recreational elements involved.
[Sec. 1.183-2(b)8), Income Tax Regs.]
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