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attended seminars, took courses, and purchased video tapes for
information on breeding Arabian horses, equine health care
issues, and horse farm management. He attended horse shows to
learn about the horse-breeding business. He hired professional
trainers. Mr. Morley's consultation with experts and his efforts
to educate himself about horse-breeding activities indicate a
profit motive.
C. Personal Pleasure and the Time and Effort
Spent by Mr. Morley
The fact that a taxpayer devotes much of his personal time
and effort to carrying on an activity, particularly if the
activity does not have substantial personal or recreational
aspects, may indicate an intention to derive a profit. Sec.
1.183-2(b)(3), Income Tax Regs. Respondent concedes that Mr.
Morley spent a substantial amount of time on the horse-breeding
activity but argues that he derived a significant amount of
personal pleasure from the activity. The absence of personal
pleasure or recreation relating to the activity in question may
indicate the presence of a profit objective. Sec. 1.183-2(b)(9),
Income Tax Regs.
Mr. Morley's work on the farm was difficult, and it often
precluded him from spending time with his family. Mrs. Morley
credibly testified that she and her children missed her husband
and that she would have preferred it if Mr. Morley had been at
home instead of working on the horse-breeding activity. Mr.
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