DN Business Accounting.

[Lasher]

For those folks on the board who run their domain investing as a business, how do you account for domain investments in terms of assets? Do you consider them long term assets and amortize them, or just expense them that year?

It's been a good year so far for my business (alas, not the domain side) and because my business is an "S" class corporation I'm facing highest tax rate on the profits at the end of the year. I'm considering investing in a few X,XXX domains to get the profit down and develop them or sell them on in the future if we have a year where the business has not done so well. Obviously this will only work if I can just expense the cost. Seems to be very little information on the web about accounting for transactions on "virtual" property.

Appreciate any experience anyone has with this, or links you can point me to for further studying.

Thanks!

 

[Spade]

Lasher -

Im considering similar strat. I am also looking for information in regards to domain name purchases / sales in terms of taxes. I havnt seen a lot, but I would imagine a creative tax guy can make it work for you. GL

Justin

 

[Paddy]

Interested too.

When i enquired, it was suggested that the renewal cost can be expensed off- not really much help.

 

[Kenny]

There will be a speaker at DomainFestLA thursday
addressing this subject.

11:00 AM – 12:00 PM Speaking Session
“Financial Planning & Tax Management”
– Selwyn Gerber (CPA), Gerber & Co

Perhaps an attending member could
take notes and share with the forum.

I wont be there until later in the afternoon
to hear JBerryhills session:
“Domain Name Trademark Concerns”
– John Berryhill

 

[Phronesis]

Honestly, I've never kept track of any sales or expenses before this year. Parking revenue and domain sales to other companies usually generates tax documents you must file but sales between domainers is pretty much under the table.

I deal mainly in investments but I've consulted several CPA's on this and the consensus is that the sales from domains should be counted as revenue, not cap gains because of the buying and selling from inventory. I don't really know that the IRS has pinned it down yet, but they are telling me this would be the least risky method.

 

[Lasher]

If sales from domains are treated as revenue and not cap gains then, by implication, domain name purchases are cost of goods sold and not long term investments to be amortized. Thanks.