FROM AN IRS WEBPAGE:

Hobby vs. Business
For tax purposes, a hobby is defined as an activity that you engage in “for sport or recreation, not to make a profit.” Even if you earn occasional income from doing such an activity, the primary purpose must be something other than making a profit.

To distinguish between a hobby and a business, you must take into account all the facts and circumstances of your situation. The IRS lays out the following 9 factors that should be considered when establishing if an activity is a business engaged in making a profit:

Whether you carry on the activity in a businesslike manner
Whether the time and effort you put into the activity indicate that you intend to make it profitable
Whether you depend on income from the activity for your livelihood
Whether your losses are due to circumstances beyond your control, or are normal in the startup phase of your type of business
Whether you adjust your methods of operation in an attempt to improve profitability
Whether you (or your advisors) have the knowledge needed to carry on the activity as a successful business
Whether you were successful in making a profit in similar activities in the past
Whether the activity makes a profit in some years, and how much profit it makes
Whether you can expect to make a future profit from the appreciation of the assets used in the activity
According to the IRS, an activity is deemed as a business if it makes a profit during at least 3 of the last 5 tax years, including the current year — or at least 2 of the last 7 years if the activities mainly consist of breeding, showing, training, or racing horses.