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If you have a hobby loss, your related expenses are miscellaneous itemized deductions subject to 2% of your AGI.
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Actually, per p. 92 of IRS Publication 17, "Losses from a hobby are not deductible from other income. A hobby is an activity from which you do not expect to make a profit." Quote, unquote: "not deductible."


Actually, if you check out p. 196 of Pub 17 (sorry, I only have the 1999 version -- the page number may have changed, but the rule did not), you can deduct hobby expenses up to hobby income as a 2% of AGI itemized deduciton.


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