I’ve heard of Schedule C “hobby loss” rules — what happens if my expenses are more than my sales?
Losses are treated differently for businesses versus hobbies, so classification matters.
The Narrative
The Empathy
You invested heavily in supplies and booths, but sales were lower than expected. You are unsure if you can claim the loss.
The Education
Business losses can sometimes offset other income, but hobby losses generally cannot. The IRS looks at intent and business-like behavior to determine classification. Consistent losses without profit intent can trigger scrutiny.
The Solution
Keep business records, track marketing efforts, and document your intent to make a profit. If losses continue, consult a tax professional to ensure proper treatment. Clear documentation helps support your classification.
Stop Guessing. Start Growing.
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