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of software development. These facts do not persuade us that Mr.
Flanagin had a profit motive.
C. Elements of Personal Pleasure
The absence of personal pleasure or recreation relating to
the activity in question may indicate the presence of a profit
objective. See sec. 1.183-2(b)(9), Income Tax Regs. The mere
fact that a taxpayer derives personal pleasure from a particular
activity, however, does not, per se, demonstrate a lack of profit
motive. See Rinehart v. Commissioner, T.C. Memo. 1998-205.
Based on the record in this case, it appears to us that Mr.
Flanagin enjoyed developing and debugging computer software
programs. Mr. Flanagin sent vendors working copies of software
products he developed. He testified that he was willing to take
the risk that the software he developed would be stolen or might
be utilized without receiving compensation. We conclude that it
was personal pleasure and satisfaction that drove Mr. Flanagin to
spend his time and money developing software for an obsolete
computer. Accordingly, this factor weighs against petitioner.
D. History of Income or Losses
A record of substantial losses over several years may be
indicative of the absence of a profit motive. See Golanty v.
Commissioner, 72 T.C. 411, 426 (1979), affd. without opinion 647
F.2d 170 (9th Cir. 1981). Mr. Flanagin suffered an uninterrupted
history of losses from the software development activity from
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