- 20 -
profit. During the years in issue, petitioners were concerned
about their financial status because Mr. Schwartz took time from
work for his surgery, petitioners paid for their three children
to attend graduate school, and petitioners experienced a large
loss in savings because of a bad pension administrator. During
these years, petitioners felt that they could not be involved
with an activity that would result in large losses.
Elements of Personal Pleasure or Recreation
The absence of personal pleasure or recreation relating to
the activity in question may indicate the presence of a profit
objective. Sec. 1.183-2(b)(9), Income Tax Regs. The mere fact
that a taxpayer derives personal pleasure from a particular
activity does not, per se, demonstrate a lack of profit motive.
We are convinced that the personal pleasure of owning and
using the Diane was secondary to petitioners’ use of the Diane
for profit because, during the years in issue, petitioners owned
other boats that were used solely for personal pleasure or
recreation and the Diane had no personal amenities (e.g., no
toilet, sleeping quarters, etc.). Further, Mrs. Schwartz had not
stepped aboard the Diane since 1991 because of an arthritic
condition.
Conclusion
We hold that petitioners met their burden of proving that
the Diane’s activity was engaged in with an actual and honest
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011