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7. Amount of Occasional Profits
The amount and frequency of occasional profits earned from
the activity may also be indicative of a profit objective. Sec.
1.183-2(b)(7), Income Tax Regs. Petitioners did not report a
profit from their horse-breeding activity. See Glenn v.
Commissioner, T.C. Memo. 1995-399.
8. Financial Status of the Taxpayer
We next consider petitioners' financial status. Sec. 1.183-
2(b)(8), Income Tax Regs. Substantial income from sources other
than the activity, particularly if the activity's losses
generated substantial tax benefits, may indicate that the
activity is not engaged in for profit. This is especially true
where there are personal or recreational elements involved. Id.
Petitioners had combined gross income, excluding the losses
from their horse farm, of $85,216, $88,391, and $103,659 in 1991,
1992, and 1993, respectively. We note that petitioners' income
was sufficient to enable them to maintain a comfortable standard
of living notwithstanding the losses from the horse farm.
9. Elements of Personal Pleasure
The final factor is the personal pleasure derived by
petitioners in conducting their activity. Sec. 1.183-2(b)(9),
Income Tax Regs. The mere fact that a taxpayer derives personal
pleasure from a particular activity does not, per se, show a lack
of profit motive. The presence of personal motives may, however,
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