Hobby Vs. Business (Where's the Line?)

[bcr229]

Thank you for your break down it was very helpful. So basically you always claim Schedule C but make sure it always under a hobby and show that you break even?

No, I don't bother with a Schedule C at all because I deliberately post a loss each year. If I get audited and the IRS wants to know about any deposits from sources other than my day job to my personal bank accounts - because remember PayPal reports transactions to the IRS - I have a stack of receipts that would give me a whopper of a writeoff should there be any attempt to state that my hobby is a business and I should file an amended return.