Hoho, there is a misunderstanding here. I did not say that about underreporting sales related to taxes to stimulate fraud. My point was that people in the industry dealing with names like Driven. Once you get there you understand contracts, markets and are dealing with real players you understand the tax implications of everything and have accounting.
What does that mean? Fair enough, but we are likely talking about different, but similar things. I have sold some. However, I am still in buying mode so keeping things quiet is good for me personally. Seriously, you may be surprised by what you would do if you were in our situation. And the truth be told, we turned down K for Cost. I think one of the biggest investments people make are their homes, and now everyone can find out what someone paid for their home with a few clicks.
The domain industry is still in its infancy, and I believe someday the prices paid will be public knowledge. Mars is correct…we all have different strategies and opinions regarding disclosure, but I am with David here for the most part.
And there are major differences between domain flippers and developers…. Flippers want to continually buy at bargain prices, and resell at a profit. However it HAS to be good for the industry and future end user buyers to see reliable comps…. IMO it will help you both immediately and down the road. One more thing…. Be careful what you wish for — you just might get it! So as the domain market matures the government may sense another revenue opportunity and decide to start to treat domains like they do real estate — thus taxing domains annually, based upon one of three methods they use for traditional commercial real estate — market value, replacement value or the income approach yes, I am a REALTOR and friends with our local tax assessor!
Thus, instead of only paying taxes on any profit from a sale, we may end up paying taxes based upon what the government views as the potential of the name — and they will tax based upon the highest value they can justify. That means if the name has great development potential even though not yet developed i. So though I would really, really, really like to know what Elliot is getting for his names and to whom he is selling them!
A certain amount of opaqueness may just be our best friend!
Profit from domain name sale - Early Retirement & Financial Independence Community
In an auction, price is disclosed anyway. No Problem there. In other situations, it is up to seller and buyer to agree about disclosure terms. Why people want to know past prices? Often, because they believe in Fair Market Prices. People are often upset, because they want to buy things they cannot afford, because they are emotional about people being smarter than them, and because they want to step in business without sufficient knowledge and assets.
Then, there is the appraising industry that tries to sell all sorts of services based upon their in-house metrics. Why some people disclose some sale prices? Because it fits in their strategy to show they can afford it. To demonstrate reach and stability. By the way: This is To me that is absolutely amazing Dave, and a big gamble to take! What if something unexpected happened to the domain industry that even gurus like yourself could not have envisaged?
There are a whole lot of other things that one can do with a sum like k that would be a lot safer IMO — if I owned a premium domain like cost. Doing this at least I could assess the value of my assets on a daily basis.
But who is to say that a premium domain name will always keep its value never mind increasing it?
TMF: capital gains on domain name sale? / Tax Strategies
In real estate, we often do not report the selling price. It does become a problem for some appraisals. If it does, they just have to come up with more downpayment. Some reporting is good, but the world does not have to know my profit on my last real estate transaction or domain name sale. Sometimes there is just to much information out there, but we might not be able to stop the Internet and the information available.
Rod You raise an excellent point, but please be aware that we have been told the same thing since — and it got really scary when the dotCom industry crashed in Many people ran for the hills and sold their names, while guys like Frank Schilling bought like crazy and made a fortune. My brother and I really believe that domain names are analagous to real estate and that real estate has its cycles, but over time appreciates in value because it dotCom is a finite market.
In my opinion, names like these have long legs and a very long future. One reason I believe our industry is still in its infancy is because most of the public still has zero idea what these names are capable of.
Because of this, we know the real value of these names is a fraction of what endusers will pay now with names of this magnitude we never consider domainers as Buyers. Watching her gauge and play that market which is very volatile was a great education to have when I entered the domain name business. My answer would have been an emphatic no, no matter how certainty the event was …. Rod LOL K is not chicken feed to me. The Fear Factor is the biggest difference between those who have money and those who have a lot of money.
And most business advisors will tell you that is a very stupid thing to do, but for some people it is the only thing to do. They both bring up well articulated philosophies, strategies and rationales relative to their respective standpoints.
Elliot — as for your comment about sticking to your guns … Moniker openly took a shot at reporting there brokerage sale of Guns.
As for your notable prowess of quick flips, I still vividly remember you purchased and sold GladiatorSandals.
Why I Don't Report My Domain Purchases or Domain Sales | cybercrunkrecords.info
Dave — You are incorrect in stating that in real estate we often do not report the sales price — you are required by law to do so! This is then recorded with the Deed and Groundwater Hazard Statement. You cannot hide from the tax man!
David J. And as I often explained to my clients back in my stock broker days, the only reason we know the name Bill Gates is that he also bucked the trend towards diversification and concentrated all his assets into Microsoft. Had he diversified he would be just a regular Joe on the street. The only proven way to true wealth is through concentration of your wealth and efforts on a specific target — diversification is for asset protection, not asset growth. Of course the vast majority of folks who swing big do strke out and go broke.
But without great risk there can be no great reward — and that is why very few people make it to the big time. Dennis … I never report the purchase price of a new home to the tax man. The building department is the only person that knows the value.
Why I Don’t Report My Domain Purchases or Domain Sales
The tax man has to figure it out for himself. I am still amazed that so many friends of mine do not understand anything about the domaining business.
I just brought a friend of mine into the space, and we are buying some names together. A few years ago he purchased numerous lots of collectible case wines, and had to deal with delivery, storage, fraud issues, etc. I would guess that a small percentage of people understand domain investing, and until the majority of the world gets involved, yes I would say that this industry is still in its infancy.
But you have lots of money now, so why endanger it? What is it that you would wish to have that you could not buy with k? This is even discounting other assets you already have. I am really concerned that this time cost. How many domain name owners are required to consider the industry MORE mature? Rod Michael and I have great value on paper. Was that a mistake in ? Why pass up that kind of revenue? However, Michael and I are both in this for the long haul and we are well aware that a mega brand like Nashville.
And that one name would be worth more than what Frank or Kevin make in a year. I believe most domainers do just that: Complaining about asking prices, talking about underpricing, overpricing and Fair Market Value etc.
We see it on forums: No business people — Just Whiners. Business takes strategy — Investment — Markup. Could AAF. Alan Insurance Acquires Alan. Nice post! Where do you find your buyers?
I agree…. May 19, posts: You will need some professional advise to work out how to put everything together on your form. You see, renewing the Domain name is a cost of maintaining your capital, but these costs can be treated differently in some circumstances. Plus, you could argue that the value of a domain is zero and that the initial registration was a fee that did not add to the capital value - just like the fee of getting a Business name.
The work you did since registering the name has added value to the domain name a classic definition of Capital. In the end it's more a matter of putting the right numbers in the right slots. Mar 25, posts: Can I buy a few hundred grand in domains at the end of the year and expense them all? However, it's even more likely, in my opinion, that they CAN be expenses No contradiction -- the tax code often gives one choices; sometimes, circumstances like what one does for a living make some choices either more attractive or Caution, it's almost certain that doing that would result in any subsequent profitable sales being treated as ordinary income, so this "tactic" is "income shifting" not sheltering!
Having said all that, I, too, am not a lawyer, and you do well to get professional advice if there's either significant money involved, you HATE hassles or both. Well yes an no. Remember captial is used to produce good and services ultimately income. If you have no income against those domain names, they wouldn't be a deduction and even if you used them as a deduction - it is limited to the income they earn.
Moderator This Forum joined: Fairly certain domain names don't play nicely with the IRS definition of capital gains. For example, you never really own domains. If you did you could stop paying those darned renewal fees.
Alas, yours is the "cent answer" no insult meant -- and it MAY be basically right My reason for writing further at this point is that I honestly beyond wishful thinking on my part think that the correct defensible answer may be CAP.
Track down Monte from Moniker. I think he goes by MonikerMan here. He's done enough business and might have the clarion answer, which if untested with the IRS, is not necessarily the right one.
Many thanks Best accountant I ever had described tax laws as always grey, never black and white. The question, according to him, always was how dark do you want your grey? Full Member joined: I've been querying Google about this subject and I have yet to find anything definitive. Response to webwork: Preferred Member joined: I realise your question is about US tax laws, but the UK tax treatment might be interesting.
The position according to the UK Inland Revenue is: Or should I say "smashing?! In UK - also check the difference between buying or selling a website as opposed to a domain. This has very different final outcomes for businesses - not sure about personal though. Trading stock vs. I'm not offering legal advise here, but the leaseholds condition doesn't apply. A domain would not be subject to captial gains because title never passes to you. It is treated the same as leasing a car.
A domain name is obviously intangible property.Buying & Selling Domains in 2018
I can't imagine any sensible legal argument that if I sell a domain name for profit, it is other than a capital gain. I'm working "feverishly" to connect with and no doubt pay handsomely an attorney or accountant who doesn't have to say IANAL although, obviously, the latter would say IAAA -- took me more than a second to crack the code -- thought you were taking me into your confidence more than I'd actually be comfortable with.
Junior Member joined: I'm certainly not a tax expert, but after discussing the matter of domain sales with my CPA last year, we wrote off a domain name sale as capital gains.
If you bought the domain name from somebody for a relatively large above dollars and did not depreciate it like an asset If you bought the domain name at the registrar, I suspect it does not matter.
Just my two cents In I DONATED a domain name I had registered a year earlier to a state run agency which falls under charitable donations in the tax law and was allowed to deduct the "fair market value based" based upon an estimate made at the time by one of those online domain selling brokers popular back then.
However since it was treated as capital property I had to declare the original cost including the annual maintenance renewal fees and all other costs I could come up with: I used Turbotax to do the calculations and just treated it as personal property.
In the past my method has been simply to call the IRS help line listed on their website and ask the specific questions. Their people have always gone out of their way to be helpful I'm guessing they get paid by the call and time or something so make sure you have a lot of time available to chat and they have all the computerized manuals and experience of answering similar questions.
These cost must be capitalized because the name will have a useful life of more than one year. The costs cannot be amortized because a domain name has no useful life. So your decision to capitalize is correct, but your amortization deductions may be challenged by the IRS. When you sell your domain, the gain will be determined by how you treat these assets. If you treat your domains as intangibles, and thus had ordinary deductions through amortization, your gain will be ordinary.
If you treated them as capital assets, your gain will be a capital gain. Very conceptually, and because the IRS has not issued specific guidelines, I think holding domain names for resale is similar to buying stock of a company. Home Questions Tags Users Unanswered.
Capital asset, or not? Ask Question. Chris W. Rea Dave Dave 1 5. This is a great question.
On the one hand, my gut tells me that the typical fees one would pay to initially register and then renew a domain each year e. On the other hand, like you, I would seek confirmation if the amounts are material. Hence, why this is a comment, not an answer. Rea Apr 15 '15 at As we decided to define the domains as an asset, we need to decide what type of asset it is. Thanks littleadv.
So what kind of income can these losses offset, if not Schedule C income? I let them expire to avoid paying renewal fees. So I do expect significant losses. Dave you can offset passive income from these domains, or the gains when you sell them. If you never sell them and never derive any income from them - you cannot deduct their costs. Dave not "domain s ", but "domain". Each domain is on its own.