Domain Sales & The IRS

[bigdipper]

Can someone explain to me how the IRS views the sale of a domain for profit?

I am assuming I would be taxed on the gain over the cost basis of the asset.

I tried to do a Quick Search of this forum, but couldn't find anything - yet i know it is a topic that must have been discussed here numerous times in the past.

If someone could shed some light on this it would be greatly appreciated.

 

[Keith]

I would also like info on this subject. Seems like sales would
be hard to track since most transactions are done privatly. Also
the number of transactions has to be huge!

 

[bigdipper]

I would also like info on this subject. Seems like sales would
be hard to track since most transactions are done privatly. Also
the number of transactions has to be huge!

Great Point... i was thinking the same thing about "private transactions" vs. a domain auction/reseller...

I've never sold anything on Sedo, etc... I would be interested to know how they handle the transaction from a tax standpoint? I would assume that they reporting these sales to the IRS via a 1099 in the beginning of the year for the previous year?

Anyone???

 

[Len]

This has some info...you may want to look at point 6.
http://www.avivadirectory.com/domain-law/

 

[WeBuyThe.Com]

Our CPA read over the Domain Tax Guide several times. Names held under 1 year and sold are treated as taxable income. Names held over 1 year are depreciated and taxed as long term capital gain. If you sell a name and the money goes into your account (not a domain trade) you need to report it, not doing so could result in IRS issues. Everything in and out of your bank account is monitored by THE MAN. Good Luck!!

 

[Michael]

Everything in and out of your bank account is monitored by THE MAN.

Well, every deposit over $10k is reported to the IRS by your bank. Otherwise I don't think they monitor it.

 

[MicroGuy]

Well, every deposit over $10k is reported to the IRS by your bank. Otherwise I don't think they monitor it.

According to my bank, you are correct. They do not track or monitor US banking account activity and are only notified of large deposits of suspicious activity.

Just don't get audited.