Was the guy running it as a Hobby or a small business trying to make Money? The rules are different.
While the old rules required all Hobby Income to be claimed in Gross Income, you could write off expenses (up to the amount earned) if you Itemized your deductions.
Starting in 2018, you still have to claim the income, but can't claim the expenses.
https://www.nolo.com/legal-encyclopedia/can-you-deduct-your-expenses-from-hobby.html
So that sounds like the issue, and yes, a smart person would try and show a small profit 3 out of 5 years to keep the IRS happy, and run it as a business.
While the old rules required all Hobby Income to be claimed in Gross Income, you could write off expenses (up to the amount earned) if you Itemized your deductions.
Starting in 2018, you still have to claim the income, but can't claim the expenses.
https://www.nolo.com/legal-encyclopedia/can-you-deduct-your-expenses-from-hobby.html
So that sounds like the issue, and yes, a smart person would try and show a small profit 3 out of 5 years to keep the IRS happy, and run it as a business.
