Be careful about using the word "hobby" - the IRS take a look at "farms" when i comes to tax purposes - they don't recognize "hobby farms" as a tax deduction. This is especially the case with having horses. one method to make it a little more "official" by making an LLC, etc. you can also go visit your local USDA farm service agency and make sure they know it's farm use. You're wanting to make it look like a legit outfit if the IRS do come to audit.
The advise i had in the past was that at some point you have to show a profit - as a small farmer it's really easy to operate on a loss, but then the IRS starts asking why there's continually a loss (who would operate a business at a "loss" each year?).
{from http://www.hobbyfarms.com/farm-marketing-and-management/farm-income-taxes-14991.aspx}
Section 183 of the tax code governs "hobby losses.” This section of the tax code was passed so Congress could close down what it perceived as inappropriate farm and horse shelters. The law sets up a presumption that if an activity shows a profit in three out of five tax years, then the taxpayer is engaged in it to make a profit. In the case of horse operations, the business must show a profit in two out of seven tax years. Here are the factors the IRS uses to determine hobby farm losses:
The manner in which the taxpayer carries on the activity.
The expertise of the taxpayer or his or her advisors.
The time and effort expended by the taxpayer in carrying on the activity.
The expectations that the assets used in the activity may appreciate in value.
The success of the taxpayer in carrying on other similar or dissimilar activities.
The taxpayer’s history of income or losses with respect to the activity.
The amount of occasional profits, if any, which are earned.
The financial status of the taxpayer.
The elements of personal pleasure or recreation.