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Donna collects stamps and then sells them for a profit. Every year from 2008-2011, she made a profit doing this. However, in 2012, she takes

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Donna collects stamps and then sells them for a profit. Every year from 2008-2011, she made a profit doing this. However, in 2012, she takes a $10,000 loss. In 2012, she takes a $10,000 business loss deduction on her income tax return. The IRS claims that this is a hobby loss and so is not deductible. Is the IRS correct? Explain

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