My neighbor across the road is a tax consultant - you have to realize that the IRS taxes monetary income - so, if you SELL your rabbits for a price, anything over $500 is "taxable" (not necessarily TAXED) as income. Where most people get in trouble is, they think it means "from the rabbits" (the $500 line). It's total income, regardless of expenses or other jobs. So if you work a job at full time, minimum wage, and raise rabbits on the side, guess what? You really are supposed to report the rabbits (lots of folks get away with NOT doing so, because only 3% of tax returns get audited). On the other hand, if you trade rabbits to your friends for "stuff", none of it has to go on the books. Bottom line, if it looks like a business and quacks like a business, keep records (especially of income and OUTGO) and file at least a schedule C. If you're just trading and/or eating "pets" . . . well you might get PETA on your butt, but I'll take them on over the IRS any day!