Semantics. If the hobby business never makes a profit and is capturing losses for tax benefits, that’s a failing business. It can be failing indefinitely as long as there’s money to support it, but you can’t call it a successful business.
You appear to be suggesting that fun hobbies which don't make money are a 'failure' rather than a success. Not everything is judged by how much money it makes.
It's really not that deep: they're characterising the business, you're characterising the hobby. The owner having a good time doesn't make it a successful business. A failing business can be a successful hobby, sure, that's still a failing business.
Doesn't running consistent losses eventually cause tax issues with the IRS?
If the losses are offsetting profit elsewhere, I would assume the IRS would become very interested in challenging the validity of the hobby business?
