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7. The amount of occasional profits, if any, which are earned.
As indicated above, petitioner has earned no profits from
his cattle-ranching operations, apart from the 1998 consulting
fee, so this factor does little to substantiate his intent.
8. The financial status of the taxpayer.
Section 1.183-2(b)(8), Income Tax Regs., explains this
factor as follows: “Substantial income from sources other than
the activity (particularly if the losses from the activity
generate substantial tax benefits) may indicate that the activity
is not engaged in for profit”. Here, at the time petitioner
purchased both parcel 1 and parcel 2, he had adjusted gross
income of over $400,000. His income remained above the six-
figure mark through 1994. Given this significant level of
income, it would not be unreasonable to conclude that making a
profit was not petitioner’s primary concern when he began his
cattle-ranching venture. The fact that petitioner has continued
his operations despite his decrease in income could offer support
for a contrary view, but his failure to make significant changes
to increase profitability belies this notion, at least with
respect to the years in issue.
9. Elements of personal pleasure or recreation.
Underlying this final factor is the premise that:
The presence of personal motives in carrying on of an
activity may indicate that the activity is not engaged
in for profit, especially where there are recreational
or personal elements involved. On the other hand, a
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