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elements involved. Sec. 1.183-2(b)(8), Income Tax Regs.
Mr. Sullivan's earnings from his employment as an investment
manager were $108,750 in 1992 and never less than $90,000
annually from 1989 through 1995. Clearly, Mr. Sullivan's
employment income allowed petitioners to sustain annual losses
from their horse-related activities averaging $40,000 during
these years. Deducting these losses significantly reduced the
after-tax cost of such activities to petitioners. Cf. Golanty v.
Commissioner, supra at 429; Osteen v. Commissioner, T.C. Memo.
1993-519. When combined with the recreational elements present
for Mrs. Sullivan, we believe the after-tax economics of
petitioners' horse-related activities support an inference that
they were not engaged in for profit.
Personal Pleasure or Recreation
The existence of recreation elements in the activity may
indicate the activity is not engaged in for profit; conversely,
where an activity lacks any appeal other than profit, a profit
motivation may be thereby indicated. Sec. 1.183-2(b)(9), Income
Tax Regs.
The record in this case amply supports a finding that Mrs.
Sullivan's recreational objectives were a significant component
of petitioners' horse-related activities. As noted, Mrs.
Sullivan has been actively pursuing an interest in horses since
she was 14, rode while in high school and college, and after
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