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where the motive is personal pleasure or recreation. Sec. 1.183-
2(b)(9), Income Tax Regs. Profit need not be the only objective,
however, and personal motives may coexist with an actual and
honest intent to derive a profit. A taxpayer’s enjoyment of an
activity does not necessarily indicate that the taxpayer lacks a
profit objective if the activity is conducted for profit as shown
by other factors. See Jackson v. Commissioner, 59 T.C. 312, 317
(1972); sec. 1.183-2(b)(9), Income Tax Regs. The fact that
petitioner may have also enjoyed betting on horseraces does not
mean that he did not engage in the activity for profit. This
factor is neutral.
Taking into account the above factors and considering the
facts and circumstances relating to petitioner’s gambling
activity, we conclude that petitioner engaged in his gambling
activity with the bona fide intent of making a profit. Having
found that petitioner conducted his gambling activity with
continuity and regularity, we conclude that petitioner was in the
trade or business of gambling during the taxable year in issue.
Accordingly, petitioner’s gambling expenses are deductible under
section 162(a), to the extent limited by section 165(d).
The parties are cautioned, however, that our holding in this
case does no more than resolve the year here in issue. See sec.
1.183-2(a) and (b), Income Tax Regs. Petitioner’s betting
strategy (2.5 percent of his “bankroll”) raises some question
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