I think for the feds, if you treat your work as a hobby, you get to deduct expenses up to the amount of income from the hobby. In other words, you can't deduct your expenses from other income, like a salary or retirement income, only from income from your hobby. If you treat it as a business, you can deduct expenses in excess of income but you need to be careful because the feds will question whether it's a hobby or a business. Making a profit in two years out of five is considered proof of being a business for the feds.
Originally Posted by Vaughn McMillan
Go into the world and do well. But more importantly, go into the world and do good.