From what I've been told by tax preparers, unless you are turning a profit, don't worry, it is still a hobby.
While a wonderfully succinct rule, it is NOT the law!
AzAtty did a pretty good job of providing the "conservative" advice relating to the OP's question. The REAL question is do you want to act conservatively with your taxes or aggressively? Me, I prefer to act aggressively and see what happens!
That said, FOR ME, my rule has been -- As long as there is a colorable claim, I'll claim it! That is, I won't do fraud but I'll deduct everything for which I can come up with any justification. Here's my reasoning:
a. Something less than 5% of all tax returns are audited -- and those are pretty good odds in my favor
b. Of those 5%, most are either very high income (with shelters or other complex returns) or (believe it or not) very low taxable incomes (but with very high deductions/credits). It is actually approaching 1% (or less) of the total returns that are audited of "normal" taxpayers. Those odds are VERY good that my return won't be audited -- so I opt for aggression.
Now, back to hobby vs. a "business." For the last 15+ years I've happened to raise horses in addition to my "real" job. After NOT taking the deductions (as suggested by my then CPA) I got a new CPA and told him I wanted to be aggressive and treat the horses as a business. We then refiled two years worth of returns and got audited -- and were blessed by the IRS.
Now, had we shown a profit? No way! (At least on a cash basis.)
Had we shown that we were likely to show a profit in the near future? No way! (Again, at least on a cash basis.)
The key however, was NOT that we had shown, or would show, a "profit" but that we were IN GOOD FAITH ATTEMPTING TO MAKE MONEY!
People too often think the 3 of 5 or 2 of 7 rules are requirements -- they are not. They are presumptions used by the IRS to determine if the activity is being done in good faith to attempt to make money.
How do you show a good faith attempt? By how you run the business:
Do you have a reasonable business plan?
Do you have the skills necessary to run the business?
What are the reasons for the losses?
Remember, Amazon didn't make any money for years but no one said IT was a "hobby."
Everyone has an obligation to pay the government every cent of tax that is owed per the law-- but not one penny more!