Hobby Expenses

Hobby expenses are only deductible to the extent of hobby income, and to even make it worse they  are subject to the 2% of adjusted gross income limitation as miscellaneous expenses on schedule A. So you want the IRS to think of your activity as a business and not a hobby so all of the expenses are deductible. How do you do that? You may have to prove to the IRS or a court based on all of the facts and circumstances that you intend to make a profit such as keeping businesslike books, using a business checking account, using a separate credit card for business, and developing an expertise in the activity. You may not have had a profit in ten years, but if you can prove you intend to make a profit you are ok. You also help your case if there are no elements of personal pleasure or recreation in the activity.