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Time and Effort Expended by the Taxpayer in Carrying On the
Activity
We next consider the time and effort petitioner expended in
carrying on the gambling activity. A taxpayer’s devotion of much
time and effort to conducting an activity, particularly if the
activity does not have substantial personal or recreational
aspects, may indicate an intention to derive a profit. Sec.
1.183-2(b)(3), Income Tax Regs.
Petitioner spent at least 40 hours per week gambling at the
casinos. Petitioner would often gamble for 12 to 15 hours at a
time, often as late as 2 a.m. to 6 a.m. We acknowledge that
gambling activities are often viewed as recreational, enjoyable
pursuits upon which many people enjoy spending significant time.
See, e.g., Calvao v. Commissioner, T.C. Memo. 2007-57.
Petitioner testified credibly, however, that she did not view
gambling as a mere recreational pursuit. She credibly testified
that she found no pleasure in gambling. Moreover, petitioner did
not go to the casino with others and while there, was focused on
winning as much money as possible. We find that this factor
favors petitioner.
Expectation That the Assets Used in the Activity May Appreciate
in Value
Another factor to be considered is the expectation that the
assets used in the activity may appreciate in value. Sec. 1.183-
2(b)(4), Income Tax Regs. The parties agree that this factor
does not apply.
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