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9. Elements of Personal Pleasure or Recreation
The existence of personal pleasure or recreation relating to
the activity may indicate the absence of a profit objective. See
sec. 1.183-2(b)(9), Income Tax Regs. An activity will not be
treated as not engaged in for profit merely because the taxpayer
has purposes or motivations other than to make a profit. Id.
Petitioners argue that although they derived some pleasure
from operating ERE, many important duties were not for pleasure
or recreation. Respondent argues that the improvements to ERE’s
facilities were lavish and made only for the enjoyment of
petitioners. Respondent also points to the fact that Mrs.
Knudsen treated the animals like house pets.
We agree with respondent that elements of personal pleasure
and recreation were present in petitioners’ exotic animal
breeding activity. However, as we stated above, some component
of personal pleasure does not negate a bona fide profit motive.
“[A] business will not be turned into a hobby merely because the
owner finds it pleasurable; suffering has never been made a
prerequisite to deductibility. ‘Success in business is largely
obtained by pleasurable interest therein.’” Jackson v.
Commissioner, 59 T.C. at 317 (quoting Wilson v. Eisner, 282 F.
38, 42 (2d Cir. 1922)); see also sec. 1.183-2(b)(9), Income Tax
Regs.
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