- 36 -
even though losses or only occasional small profits are actually
generated. Sec. 1.183-2(b)(7), Income Tax Regs.
Respondent focuses on the fact that Gillian Johnston grew up
training and racing horses, enjoys steeplechase training, and
still loves to ride. Thus, respondent contends that most of her
activities in connection with GJ Stables were for pleasure and
recreation rather than for business. We disagree. First, we
note that Gillian Johnston has not done any steeplechase racing
in this country, and she employs professional jockeys to ride the
stable's horses in all races. Moreover, if GJ was actually a
hobby, Gillian Johnston most likely would have hired others to
perform the dirty tasks associated with running a stable.
However, in an effort to reduce costs, she performed these
arduous tasks herself, including shoveling horse manure.
Finally, in passing we note that the tax law does not
prohibit an individual from enjoying his or her work. See Cole
v. Commissioner, T.C. Memo. 1992-51 (personal pleasure derived
from operating a pecan farm did not indicate lack of profit
motive).
Thus, based on the entire record, we hold that GJ Stables
was an activity engaged in for profit. Accordingly, petitioners
may deduct their related losses sustained during the years in
issue.
Issue 5. Whether $1,131,438 Was the Fair Market Value of a
Conservation Easement Encumbering the Flying H Ranch, Donated By
Petitioners to the Nature Conservancy During 1989
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