- 8 -
These facts do not persuade us that petitioners had a profit
motive.
C. Elements of Personal Pleasure
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. Petitioner
conceded that he enjoyed riding horses and watching his children
compete by riding his horses in 4-H Club competitions. We find
that this factor weighs against petitioners.
D. Time and Effort Petitioner Expended
Where an activity has substantial personal or recreational
aspects, the time and effort spent may be due to a taxpayer’s
enjoyment of the activity rather than an intent to derive a
profit. White v. Commissioner, 23 T.C. 90, 94 (1954), affd. per
curiam 227 F.2d 779 (6th Cir. 1955). Although enjoying an
activity does not preclude a profit objective, the facts of this
case suggest that petitioner spent time on the activity because
of his children’s and his own fondness for horses rather than an
expectation of profit. Cf. Harrison v. Commissioner, T.C. Memo.
1996-509.
E. The Activity’s History of Income or Losses
A record of substantial losses over several years may be
indicative of the absence of a profit motive. Golanty v.
Commissioner, 72 T.C. 411, 426 (1979), affd. without published
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011