As my post back in 2005 stated:

Regardless of whether your photography is a business or a hobby, you can use it to make a difference in your tax obligation. Specifically, if you are running a photography business, even part-time, the costs to run it can offset your income – not just the income from your photography business but from your day job, as well. If your photography is a hobby, then the costs to support it can be deducted from the income from your photography.

The New York Times reports that the United States Tax Court has confirmed this approach. Advice from a CPA is the best way to address your specific needs.

Update: Additional thoughts on the ruling are available at Forbes and from a law professor.