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[[Cash awards are to be entered on 1040, line 21 as other income, as I stated.

You can then deduct your expenses related to that hobby, up to the amount of
the income generated by that activity. However, it must be deducted as a
"miscellaneous deduction", which is subject to the 2% of AGI exclusion.]]

But a hobby "business" is MUCH DIFFERENT than an award or a prize. If your hobby is correctly reported, you'll report the income and expenses on Sch C, and not as miscellaneous itemized deductions. I thought Pub 535 explained it as such.

What they are talking about here is a pure hobby...where you have no INTENTION of making a profit...ever...and simply stumble into some money.

The more likely issue is where you have a business and generate income, but not enough income to cover all of your operating expenses...and the business can be considered a "hobby".

I hope that this makes the point.

TMF Taxes
Roy
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