Quote Originally Posted by Rapid Robert View Post
Schedule D treatment is preferable, and correct in my opinion. As a hobby, you still have to report gross taxable income on Line 21, but as you say, no losses allowed
I suppose if treated as a hobby, the original cost of the items could be considered COGS and therefore deducted before calculating gross income. In the case of Schedule D, each sale transaction stands on its own as a gain or (non-deductible) loss, while as COGS all the transactions are aggregated. But treating it this way (hobby with COGS) to me also points much more strongly to it being a for-profit activity, since you'd be carrying inventory (conducting the activity in a business-like manner).