<prompt> Human: My coworker was explaining to me that he has a few businesses that exist only on paper that he uses to decrease his tax liability, showing losses every year. He expenses things like his car payment, gas, and electronics as business expenses and this decreases his personal tax liability since the business does not actually make any money.Is this even possible? If it is, it cant be legal, can it??  <response>: Everyone here has basically said the same thing - what youre doing needs to try to turn a profit as a business venture. Having said that, the bigger question becomes, why wouldnt you want to turn your hobby into something profitable and have some amazing tax breaks because of it? Like to knit? Sell some hats on Etsy. Its really easy to start a side business and do this. Source: me, someone whos done it, been audited, even profited from the audit because they pointed out even more things I could have written off. 