- 21 -
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
680.
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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