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Petitioner contends that a small chance of making a large
profit may indicate the requisite profit objective. Sec. 1.183-
2(a), Income Tax Regs. Specifically, petitioner argues that the
cash and prizes available per season totaled $1,250,000 and he
believed he could earn a profit of $500,0004 per season.
Petitioner does not specify how many or which tournaments he
believed he could win to generate this profit. Petitioner has
not persuaded us that he had a chance either to make a profit or
to recoup his losses. The chance to make a large profit factor
weighs against petitioner.
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. Sec. 1.183-2(b)(8), Income Tax Regs. Although
petitioner was employed by Kodak during the years in issue, his
income was not substantial. The income from other sources factor
is neutral.
The presence of personal motives in the carrying on of an
activity may indicate that the activity is not engaged in for
profit, especially where there are recreational elements
involved. Sec. 1.183-2(b)(9), Income Tax Regs. Petitioner
argues that he suffers from severe motion sickness. Petitioner
4Petitioner states that this amount is in “today’s dollars”
but does not provide any details regarding his sources of data or
present value computations.
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Last modified: November 10, 2007