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years in issue. This fact weighs in favor of respondent.
However, because petitioners’ special education activity was in
the startup stage, we do not give this factor much weight. See
Vitale v. Commissioner, T.C. Memo. 1999-131, affd. 217 F.3d 843
(4th Cir. 2000).
8. The Financial Status of Petitioners
Substantial income from sources other than the activity may
indicate that the taxpayer is not engaged in the activity for
profit, particularly if the losses generate substantial tax
benefits. Sec. 1.183-2(b)(8), Income Tax Regs.; Hastings v.
Commissioner, supra; Lundquist v. Commissioner, supra.
Petitioners reported adjusted gross income of $229,665 and
$229,219 in 1999 and 2000, respectively. Petitioners deducted
the losses at issue from their taxable income, thus generating
substantial tax benefits. These facts weigh in favor of
respondent.
9. Elements of Personal Pleasure or Recreation
The presence of personal or recreational 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.; Hastings v. Commissioner, supra; Lundquist v.
Commissioner, supra. However, the fact that the taxpayer derives
personal pleasure from engaging in the activity does not show
that the taxpayer lacks a profit objective if the activity is, in
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