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Zila royalties and from the sale of Zila stock. Petitioner sold
his Zila stock as he needed money and borrowed money that was
secured by his Zila stock.
By the time of trial, petitioner had sold most of his Zila
stock and had used the proceeds from the sale of the stock and
all of his Zila royalties for many years to fund his mining
activity. Petitioner’s financial commitment to his mining
activity apparently led respondent to concede in his reply brief
that it “is probably true” petitioner’s mining expenditures were
not motivated by tax savings.
This factor favors petitioner’s position.
9. Elements of Personal Pleasure or Recreation
The existence of personal pleasure or recreation relating to
the activity may indicate the absence of a profit objective. See
sec. 1.183-2(b)(9), Income Tax Regs.
Petitioner argues that mining is not the sort of activity a
person engages in for personal pleasure and that the frustrations
in dealing with Federal, State, and local government regulatory
agencies and the harsh working conditions offset any elements of
personal pleasure derived from mining. Respondent contends that
personal enjoyment can coexist with demanding labor and that
petitioner loves being at the mine and is tired of working with
sick people.
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