There are two ways to avoid the hobby loss rules. The first way is to show a profit in at least three out of five consecutive years (for Nina, two out of seven years for breeding, training, showing, or racing horses). The second way is to run the venture in such a way as to show that you intend to turn it into a profit-maker, rather than operate it as a mere hobby. The IRS regs themselves say that the hobby loss rules won't apply if the facts and circumstances show that you have a profit-making objective.
In other words, if it is demonstrated that you truly have the intent and the ability to make a profit, you can avoid the hobby loss limitations.
As an example, let's say you are a professional model-airplane flyer. You spend thousands and thousands of dollars on equipment, but your only hope for any revenue is the $50 grand prize at most contests. Even if you enter a contest every week and win every one, you have no hope of ever covering your expenses. In those facts and circumstances, you are deemed to be engaged in a hobby and the expenses are not deductible.
If you change the circumstances a bit, and you also modify and build your airplanes, and you take them to competitions in hopes of selling your designs. You have years of experience in flying airplanes, and you have set up separate bank accounts for your business. You engage professional advice on how to best market your talents and your products. In those facts and circumstances, even if you lose money every year for 20 years, you would not necessarily be deemed a hobby.