- 17 - not the equivalent of the actual and honest objective of earning a profit.” Riddle v. Commissioner, T.C. Memo. 1994-133. Moreover, Tony could not earn a substantial profit without securing large sponsors, which he failed to do. This factor favors respondent. 8. Taxpayer’s Financial Status Substantial income from sources other than the activity may indicate the lack of a profit motive, particularly if (1) losses from the activity generate substantial tax benefits, and (2) personal or recreational elements are involved. Sec. 1.183- 2(b)(8), Income Tax Regs. Tony had substantial income from CRC and his commercial real estate ventures. In 1992, Tony received $50,000 in cash consideration of his interests in CRC and reported receiving $699,925 from the sale of the joint ventures, as well as wage income of $51,931 from CRC. As previously discussed, there were strong personal and recreational elements to Tony’s stock car activity. This factor favors respondent. 9. Elements of Personal Pleasure Elements of personal pleasure or recreation may signal the absence of a profit motive. Sec. 1.183-2(b)(9), Income Tax Regs. The evidence clearly shows that Tony enjoyed and obtainedPage: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Next
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