I looked briefly at it, but the catch where I was wasn't the tax issue, it was the other regulatory problems and costs.
Check the local codes and regulations in your area carefully. In my specific location home occupations are problematic because you have to get a conditional use permit ($$'s) that can be pulled at any time if any one complains for any reason and requires everyone within some hundreds of feet (I think it worked out to my 12+- closest neighbours) being notified and any one of them having a chance to shoot it down ahead of time. So there was a significant uncertainty factor up front.
Additionally talk to your insurance agent, I discussed it with mine and as long as I don't sell
anything ever its a hobby and my tools are all covered under my house insurance. IF otoh I start selling things and I didn't get an additional rider a) none of my tools would be covered and b) if there was a problem (fire, etc..) that originated in the garage that spread to the house it could also have caused my house coverage forfeit. The rider was something just north of $100/mo (about $1500/year if I remember correctly - I also recall it being quite a bit higher for woodworking than some other craft type industries) but I'm sure every insurance company classifies it differently (and probably by region) so check on what your specific situation is, it may well be a lot better.
Obviously all of this varies widely by region and coverage, etc.. so your mileage will most definitely vary from mine. In my case once I added it all up it was pushing $2k of compliance costs per year and I just didn't see that penciling out anytime real soon given my limited shop time so I decided to hold a hard "no sales" line and keep it strictly a hobby. I also know a lot of folks fly a little under the radar on some of these issues and never have a problem, but it didn't seem worth the risk to me.
I also have a rather strict "no outside work" clause as part of my day job employment contract, I'm pretty sure I could have gotten an exception for this as its very clearly not a competing business but it wasn't worth spending several hours of my life talking to the company lawyers about it given the above (and again flying "under the radar" could mean immediate termination which also didn't seem worth it).
So when folks ask "why don't you sell this" I ask them "how much time you got for the explanation" sigh...
On the IRS side the base rule is that a legitimate business has "a profit in 3 out of 5 years". You can obviously go outside of that, but your risk of audit goes up substantially and you risk getting reclassified as a hobby (back taxes, possibly significant penalties, etc..). In those cases your best defense is really good records and careful categorization of expenses and time. If you can show an expectation of future profit that is also a helpful factor. There was recently an interesting tax court ruling on this in favor of someone who never had a profit - the list of tests applied there is useful:
http://www.nolo.com/legal-encyclopedia/when-artists-work-business-versus-hobby-irs-analysis.html
The most relevant section of the tax code for the test for disallowed hobby/craft income:
https://www.law.cornell.edu/cfr/text/26/1.183-2
You might also find the IRS audit guidelines on this area useful (if you're into reading long boring documents.. and you made it this far so I guess likely?
):
https://www.irs.gov/pub/irs-utl/irc183activitiesnotengagedinforprofit.pdf