I had a great woodworking business going it took me 3 years to turn a small profit, but it was great. Then covid hit and all my supplies tripled in price which means I had to increase the price but I keep the profit was very small and my sale dropped by 85%. Needless to say I had to figure out what I going to do until the economy came back. I searched the internet for something I could do with all the wood I had in my shop. Decided to buy a CNC machine and start making wood items with it. This was in April of last year. I still kept my business name in hopes that if people see my additional product it might spark more sales. So at the end of 2024 I claimed another loss on my taxes. Turbo tax sent me a notice saying that if I don't turn a profit this year 2025, the IRS can claim my business to be a hobby. I have claimed a loss for the past 3 years. Any truth to this claim?
When covid hit I was at a stand still for 2 years, trying to figure out what to do to save my business.
Any advice will be helpful.
Rod