If you look at the paypal account as a whole the expenses are not greater than income in 2012 because I don't use it just for DU stuff, I use it for totally unrelated stuff as well. It doesn't make any difference if donations were set as that (going into a business account) as far as paypal is concerned though, any account in my name (SSN) is simply combined and added up whatever was sent there and if the total is over the threshold it gets sent to the IRS as one number under my SSN, from what I can tell from reading their site. From what I've gathered I can't say X part of it was a business and the rest wasn't. It's not registered as a business and I'm not going to register it as a non-profit (would be too late to do it now anyway as far as these taxes are concerned) but if another member wants to go through all that and the yearly tax filing they can and of course the legal risks that might come up. You would still have to do the meticulous accounting work involved which frankly is not hobby work and I'm not willing to do it again.