Louis A. Filios and Estate of Emma L. Filios, Deceased, Louis A. Filios, Executor - Page 21

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          from treating a hobby as a business may induce a taxpayer, who               
          has enough income, to invest in that hobby where the taxpayer                
          would not otherwise do so.  Engdahl v. Commissioner, supra at                
               This factor favors respondent.                                          
               9.   Elements of Personal Pleasure                                      
               The presence of recreational or personal motives in                     
          conducting an activity may indicate that the taxpayer is not                 
          conducting the activity for profit.  Sec. 1.183-2(b)(9), Income              
          Tax Regs.  A taxpayer's enjoyment of an activity does not show               
          that the taxpayer lacks a profit objective if the activity is, in            
          fact, conducted for profit as shown by other factors.  Jackson v.            
          Commissioner, 59 T.C. 312, 317 (1972); sec. 1.183-2(b)(9), Income            
          Tax Regs.  However, if the possibility for profit is small                   
          compared to the possibility for gratification, the latter                    
          possibility may be the primary motivation for the activity.                  
          White v. Commissioner, 23 T.C. 90, 94 (1954), affd. per curiam               
          227 F.2d 779 (6th Cir. 1955).                                                
               Petitioners point out that neither petitioner nor his family            
          rode his horses.  Despite this, we think petitioner owned horses             
          for 37 years, despite losing $6 million, because he enjoyed it.              
          From petitioners' standpoint, this factor is at best neutral.                
               10. Conclusion                                                          
               We conclude that petitioner did not operate his horse racing            
          and breeding activity for profit in 1992 and 1993.                           

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