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Cf. Golanty v. Commissioner, 72 T.C. at 429; Sullivan v.
Commissioner, T.C. Memo. 1998-367. When combined with the
recreational elements present for Dr. Hillman and Denise, as well
as petitioners’ tendency to treat personal expenses for Denise’s
equine instruction and the care of “nonbusiness” horses as
business expenses, we believe the after-tax economics of
petitioners’ show horse activity support an inference that the
activity was not engaged in for profit.
Personal Pleasure or Recreation
The existence of recreational elements in an activity may
indicate that the activity is not engaged in for profit; on the
other hand, where an activity lacks any appeal other than profit,
a profit motive may be indicated. See sec. 1.183-2(b)(9), Income
Tax Regs.
The record supports a finding that petitioners’ recreational
objectives were a significant component of petitioners’ show
horse activity. Dr. Hillman has been involved with horses for 40
years. Furthermore, Denise has been riding, showing, and caring
for horses since she was 8 years old and enjoyed riding and
grooming the horses included in petitioners’ show horse activity.
As previously noted, most of the onerous tasks of their horses’
care were performed by hired help, the expenses of which were
deducted.
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