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benefits, may indicate that the taxpayer is not conducting the
activity for profit. Id.
Petitioner contends that her financial status should have
little significance because the amount she expended reduced her
spendable income more than the benefit it provided in reducing
her taxable income. Her argument ignores that losses from one
activity can provide a tax benefit if the losses shelter income
from another source. Petitioner is the beneficiary of a $6
million trust that provided her with over $3.2 million in income
from 1985 through 1996, including over $200,000 in 1996. During
that same time, petitioner incurred and deducted over $1.1
million of losses from her thoroughbred horse activities.
Petitioner does enjoy a tax benefit from her thoroughbred horse
activity.
9. Whether Elements of Personal Pleasure or Recreation Are
Involved
We next examine whether elements of personal pleasure or
recreation were involved in the activity. The presence of
recreational or pleasurable motives in conducting an activity may
indicate that the taxpayer is not conducting the activity for
profit. Sec. 1.183-2(b)(9), Income Tax Regs. A taxpayer’s
enjoyment of an activity does not show, however, that the
taxpayer lacks a profit objective if the activity is, in fact,
conducted for profit as shown by other factors. Jackson v.
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