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Because these losses occurred during the initial or startup stage
of the activity, however, this factor is neutral. See id.
6. The Financial Status of the Taxpayer
A profit objective may be indicated where the taxpayer does
not have substantial income or capital from sources other than
the activity. Substantial income from sources other than the
activity (particularly if the losses from the activity generate
substantial tax benefits) may indicate that the activity is not
engaged in for profit, especially if there are personal or
recreational elements involved. Sec. 1.183-2(b)(8), Income Tax
Regs.
Petitioners’ reported gross income of $47,959 in 2000 is not
insignificant. Given that personal and recreational elements
were involved in the RTP activity, and that the RTP system was
geared towards generating income tax deductions, this factor does
not support a profit objective. See id.
7. Elements of Personal Pleasure or Recreation
The presence of personal motives in carrying on an activity
may indicate that the activity is not engaged in for profit,
especially where there are recreational or personal elements
involved. Sec. 1.183-2(b)(9), Income Tax Regs.
Petitioners testified that they hoped to make a profit from
the RTP activity. As discussed above, however, the activity
involved personal and recreational elements, such as dining out
and meeting friends. This factor does not support a profit
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