Started Mary Kay and bought $3000+ product. Never sold anything. Only kept $200 or less for personal use. Do I report it as a business or as a hobby for a deduction?

[JJpup]

I am trying to make the most back as after selling back (returning) some of the product for a 10% loss, a loss about $500 at least. Plus some of the product was not able to be returned as it was a "category 2" product which they don't refund for.

What is the best way to file this? As a business or a hobby? I am planning on using TurboTax Deluxe.

[DanielV01]

Correct filing would be to file this as a business, and the amounts you purchased as inventory.  Very little will get deducted in 2018, because you may not have had significant other activities.  By entering the amounts as inventory, or costs of goods sold, this expense is suspended (or carried-over) until you sell or dispose of them.  

This year, when the items are sold or disposed of, then the inventory expense that was suspended gets used as expenses against sales.

In addition, you may have had other start-up costs from last year that you may claim (training you had to pay for, travel for business purposes, advertising costs, and the like).  

To claim this, you will not be able to use TurboTax Deluxe, at least not the online version.  The online version will require you to use TurboTax Self-Employed.  You can use TurboTax Deluxe CD/Desktop to file your return, but you will find the navigation much easier using TurboTax Home and Business.