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3. Taxpayer's Time and Effort.
The fact that a taxpayer spends much time and effort in
conducting an activity may indicate that he or she has a profit
objective, particularly if the activity does not have substantial
personal or recreational aspects. See sec. 1.183-2(b)(3), Income
Tax Regs. In McCarthy I, T.C. Memo. 1997-436, we found that
petitioner “devoted most of his spare time” to Benjamin's racing
and that he “has extended his time and effort well beyond the
degree that parents ordinarily devote to their children's
‘extracurricular’ interests.” In this case, however, there can
be no doubt that petitioner, who himself was an amateur motocross
racer for 2 years, experienced personal joy in observing his son
participate in motocross racing and in helping his son pursue the
activity. Although elements of personal satisfaction do not
necessarily negate a profit motive, see, e.g., Ranciato v.
Commissioner, 52 F.3d 23, 26 n.4 (2d Cir. 1995), vacating T.C.
Memo. 1993-536, we find in this case that the father-son
relationship involved and the considerable amount of personal
satisfaction and recreation derived by both taxpayer and his son
outweigh the significant time and effort invested.
A taxpayer’s withdrawal from another occupation to devote
most of his energies to the activity may also be evidence that
the activity is engaged in for profit. See sec. 1.183-2(b)(3),
Income Tax Regs. The record shows that, at all pertinent times,
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