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had a substantial amount of income from sources other than horse
breeding but did not engage in the activity for pleasure; the
Court viewed the fact that the taxpayers spent 46 and 69 percent
of their adjusted gross income on the activity and derived
insubstantial tax benefits as an indication that the activity was
not a hobby).
This factor favors petitioners.
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. See 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. See
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. See White v. Commissioner, 23 T.C. 90, 94 (1954),
affd. per curiam 227 F.2d 779 (6th Cir. 1955).
Respondent contends that petitioner derived great pleasure
from working with his horses, studying their bloodlines and the
history of the Arabian horse, and showing the horses in
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