Quoted from absocountry2:I got a warning like that before about cars. I did a lot of flipping for fun because I liked the cars and did not want to see them taken to the Junk Yard. I went and told them it was a hobby. They asked how I could prove it. I told them they same way they could prove it was a business, there is none. Some states count title transfers, they did not and there was no magic # to be a dealer.
Car repair was not what I did full time day to day so this was a hobby tied to my racing. They ended up taking my word on it. They left me alone and I was also able to see the info about the "complaint." It was a "friend" that I had helped many times. I did not help him any longer and he avoided me. I did not even have to say anything to him. I was not going to save somebody $100 hr on their car working on it for free if they were going to stab me and there was no way I could charge for it as a hobby.
The easy way to prove something is a business is if it is profitable, or mostly profitable. I may think it's "fun" and a "hobby" to flip things on Ebay - but if I'm making money doing it - then pretty simple it's a business. If you fix things and give them away, or sell them at your original cost because it's fun, then it's a hobby. On the other hand, "fun" does not define a hobby as well - just because work is fun doesn't make it a hobby instead of a business.