@wxman1 wrote:
How would I mark only a portion of the 1099 as hobby and the rest of it as business?
You are going to have to maintain meticulous records and allocate accordingly if you decide to take the approach you outlined. Be prepared to justify this approach in the event you are audited.
For reference: https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business and
https://www.irs.gov/newsroom/know-the-difference-between-a-hobby-and-a-business
@wxman1 wrote:
.....suppose down the road I decide to start selling the "free, but taxable" Vine products and combine it with my retail business.
If you are going to take the position that the free products are the result of a hobby (hobby income), why would you combine them with your retail business?
It appears as if it would be more appropriate to sell them separate and apart from your retail business as personal use items. If you sell an item at a gain, you would then have a capital gain on that item (rather than ordinary income subject to self-employment tax).
