If this criteria is met, the burden is shifted to the IRS to show that the activity is a hobby. If not a hobby, put on schedule C - income from trade or business. Allocate expenses between personal portion and business portion. They are not deductible unless allowed by statute. Legal fee for divorce - personal Legal or professional fees for tax advice on divorce are deductible as an itemized deduction.
Unrealized losses are never deductible.
Unless a sale or exchange has occurred, no loss is allowed, whether the loss is temporary or permanent. The disallowance rules merely cause the tax consequences to reflect economic realities. Losses between related parties directly or indirectly are disallowed. They are necessary because of the voluntary nature of our taxpaying system. Bookkeeping and record keeping requirements are inherent in our system.