As a legit business, you can also deduct what you pay for the scrap you sell as well as depreciate the vehicles and tools you use. If you use a vehicle which is also used for personal use (ie: your car), you will also want to keep a record of mileage for business use as well as mileage on Jan 1st and Dec 31st. Do not be afraid of an audit, as long as you keep some form of record. It doesn't have to be anything fancy - I use a Word Document and every year is on the same Document. In the beginning, you may well show a Business Loss and actually pay less taxes than you would have. Again, don't worry about it, the IRS expects a loss in the beginning.
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