What's up with this whole business loss verification section?

A small business can claim losses if your ordinary and necessary business expenses are large than your income.

Enter all your income and all your expenses.

Keep in mind, the IRS wants businesses to make a profit, otherwise, the IRS can disallow some of your losses by reclassifying your business as a hobby.

An activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).

If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. 

See When the IRS Classifies Your Business as a Hobby.