I've got a little shop and have made some pretty significant investment in tools over the past couple of years. Still, I consider it a hobby as I haven't been selling any of my pieces and I actually enjoy the design side of furniture-making perhaps even more than the fabrication side of things. I've got a lucrative day job as a software marketer and have pretty much accepted that I'll probably never be able to turn a "side business" like woodworking into a more profitable endeavor than my day job. But, I'd like the option of being able to turn a small profit with my woodworking hobby -- especially if I can defray some of the capital costs by structuring it as a business.
For those in the business, especially those with a sole proprietorship or LLC, I'm curious if you've been able to write your tools off as capital expenditures and -- if the business doesn't post a profit in a given year -- if you can use that loss to offset your personal tax liability from other (more profitable) ventures?
Maybe this is a question best asked in a tax forum but I thought I would start here. Thanks!