Money making hobbies ARE taxed, but only on the net income after investment back into the hobby. It's like gambling income... you have to report it and pay taxes on it, but only on the net amount after you figure in your losses.
If my mining hobby appears to earn enough to buy 2 Mini Rigs this year (it won't- this is an example!) then on December 31 I order and pay for those Minis, net income from my hobby is $0 = no tax obligation. Eventually, after a period of years, I will probably convert my hobby into a business, at which time I will begin to assign the value of my Minis to the business, which will treat them as Capitalization of the business, and then enjoy having a depreciable asset. Section 179 says I can depreciate up to 100% of the income of the business to a maximum of $25,000 per year (beginning in 2012). So, I zero out the income of $25,000 per year through depreciation, dispose of those particular Minis by removing them as assets from the business (remember they are fully depreciated now, so they are worthless to the business) and give them back to my favorite officer of the Company, myself, as a bonus for a job well done. Since they have no value (they are fully depreciated) they can now be returned to service in my hobby where we can begin the entire cycle again, this time with the gains from these particular units being used to invest in new hardware that can be assigned to the Company, etc...
In five years, I will do a careful analysis of the Company and discover to my horror that we have not made money that we could pay taxes on for five whole years! Argh! My business is a failure! I am miserable, and with a heavy heart I will disband this failed enterprise, carefully filing all proper reports with the Secretary of State and the tax authorities.
And return to my hobby of mining.
Where I will now own several very nice little assets free and clear to support my hobby, and I can look forward to starting a new Company, "Soon To Fail Mining Company #2, Inc." in a year or two by donating all this new hardware that has kept my hobby from making any money for all this time.
Hypothetically speaking of course, your results may vary, IANAL, please consult your attorney before attempting this at home, yada, yada...
Where can we buy your book ?