What about all the people who are self employed? Does this mean they are red flagged as well? I'm self employed. I don't claim thousands of dollars on my quilts. I claim the loss of what the quilt cost, including long arm quilting and driving to buy the fabric, and the notions I use to make the quilts...applique sheets, thread, needles, blades, etc. It's totally legal. My MIL wouldn't risk her license for me, believe me. I have shown a loss for 3 years and no one has knocked on my door. I never get the amount of money I actually spent (plus my time) for my quilts. I spend over $150 on fabric (front, batting, back, thread) and sell them for $200 to $250. I count my time. This isn't a big scam or anything. I do have a license and a business name. This is all legal. I just wondered if anyone else sold their quilts and claimed it on their taxes? I do claim my sewing room, a portion of it. But I also sell quite a few quilts since I sell them so cheaply. The gal at my LQS is selling her quilts and she told me to look at her's and figure out how much I should sell mine for. Well, her's aren't selling, so I decreased the price of mine and they are selling. There are hundreds of thousands of people who sell on ebay and other places like that and they write off their taxes and claim it as a home business. My MIL goes to classes every year to keep up on the newest tax laws, so she's savvy to all the laws. I think you all misunderstood me.