buckworks - 1:26 am on Jul 2, 2010 (gmt 0)
IMHO, if you have enough income that you need to start declaring it on your taxes, it's a business.
Expenses that were incurred to earn the income can usually be deducted from that income for tax purposes, but they have to be adequately documented.
If you have a website that earns income, you might not be allowed to declare a net loss, but you should be able to deduct costs like your hosting, domain names, advertising expenses, your internet connection, computer equipment, office equipment and supplies, reference books and lots more.
Keep a good paper trail.