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3. The Time and Effort Expended by the Taxpayer in
Carrying On the Activity
We next consider the time and effort petitioner expended in
carrying on the drag racing activity. A taxpayer’s devotion of
much time and effort to conducting an activity, particularly if
the activity does not have substantial personal or recreational
aspects, may indicate an intention to derive a profit. Sec.
1.183-2(b)(3), Income Tax Regs. The fact that a taxpayer devotes
a limited amount of time to an activity does not necessarily
indicate a lack of profit motive where the taxpayer employs
competent and qualified persons to carry on the activity. Id.
Petitioner expended an adequate amount of time on the drag
racing activity during the years at issue. Petitioner competed
in eight races in 1999 and 2000 and six races in 2001. When
petitioner was unable to race, petitioner’s son raced
petitioner’s car. Petitioner testified that he limited the
number of races in which he competed because he did not have
sponsorship and was trying to minimize costs. Petitioner’s
report to Sac and Fox for 1998, however, indicates he undertook
some activity on behalf of Sac and Fox on 31 days during that
year. See Canale v. Commissioner, supra (taxpayer decreased the
number of races entered after the taxpayer decided to leave
racing but had devoted substantial time to racing in previous
years). Petitioner introduced no evidence regarding the number
of hours per week he spent on drag racing but indicated it
varied, depending on, for example, the level of repairs needed
after a race. Petitioner’s schedule, although full-time, was
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