Many people turn their hobbies into a business operation. Not so much to make a living or make big profits, but more to help offset the costs of the hobby. Whenever you go to one of those community fairs, the vendors at the respective booths are mostly folks selling a product that is direct outcome of their hobby. The bands that play on stage, they make some money, but never enough to offset the cost of instruments, gear and transportation. But they enjoy entertaining folks and they hope someday they’ll get discovered.
De Minimis is a term used meaning ‘of little to no value’. It is often used in the business world when referring to the Internal Revenue Service issues. In general, the IRS defines this as approximately $500 when referring to capital expenditures and $10,000 or less when referring to life insurance proceeds. The key to the term is that the IRS is choosing reduced paperwork over any marginal tax revenue, i.e. cost to include is greater than benefit derived.
The Internal Revenue Service uses a complex definition to identify capital expenditures (assets). A capital expenditure is not deductible as an expense in the tax year purchased; the taxpayer or entity must use depreciation, amortization or depletion to obtain deductible value on the entity’s return.