Let’s talk a little about hobby losses. If you have a enterprise you have started that you are not really running with the intent of making a profit, the hobby loss rules kick in. You cannot deduct expenses that are in excess of the income earned. There is a possibility in some cases you might take the excess deductions as a misc itemized deduction, but not always.
The IRS considers an enterprise a hobby if you have not made a profit in 3 of the last 5 years including the current year, and 2 out of the last seven years including the current year for breeding, racing, training and showing horses. Here is a link to see the IRS hobby loss criteria:
http://www.irs.gov/newsroom/article/0,,id=169490,00.html
It is important to remember that you have to have a viable business for the IRS to allow you to deduct losses. This means you have to make money sometimes. We can talk about your business and whether it will meet the IRS requirements to stand as a business.