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Although the mere fact that a taxpayer derives personal pleasure
from a particular activity does not negate a profit intent with
respect thereto, the presence of personal motives may indicate
that the activity is not engaged in for profit. This is
especially true where there are recreational or other personal
elements involved. Id.
We believe that petitioners had personal reasons for
participating in their horse activities. We believe that
petitioners operated their stable out of pleasure for the
activity itself. We recognize that caring for horses and
maintaining a horse farm is hard work. However, the fact that
running the horse farm was hard work does not negate the pleasure
petitioners received from engaging in the horse activity.
This factor favors respondent.
10. Conclusion
We have reviewed the record and evaluated the nine factors
above. Petitioners' lack of expertise, their history of
significant losses, their lack of concern in taking actions to
make their activity profitable, their ability to use the
activity's losses to avoid paying income and self-employment
taxes in 4 of the 5 years in issue, the unlikelihood of asset
appreciation, the fact that petitioners operated the activity in
a nonbusinesslike manner, and the personal pleasure enjoyed by
petitioners in conducting their activity lead us to conclude that
petitioners lacked the requisite profit objective in each of the
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