discuss Domain taxes

[lambo.com]

Whether your good or bad at domaining it doesn't count assets or allow to value assets so the best domainers might be always showing a loss called turn over and reinvesting.
If every time you made a k you reinvested it then you will continue to show a loss to tax man.

That's not how taxes work bro. You can't just keep reinvesting to avoid taxes.

 

[trelgor]

https://www.dntaxguide.com/

 

[trelgor]

I love you too.

 

[trelgor]

Avoiding tax is an artform. And I’ve paid a whole lot of tax. Just not on domains.

 

[lock]

that's right, different to what you said before though.

You needed me to elaborate. Taxes are paid end of each year not at time of sale.

 

[lambo.com]

You needed me to elaborate. Taxes are paid end of each year not at time of sale.

 

[karmaco]

If you are in the business of buying and selling domain names, and your cost of buying domains exceeds or equals your profit of selling domains any given year, what will be your taxable income? Please explain.

Just because you reinvested part or all of your profit money into another potential asset doesn’t mean you didn’t earn the money originally. IRS makes everyone pay taxes on earnings with zero concern on what you spent it on. In some circles of very good names I am sure those are to be considered assets.

 

[trelgor]

Sure I earned it. Then I reinvested it in more inventory.

I don’t know about the IRS. But where I am, single offshoot domain names sales are considered in the income class of ”capital”, similar to stock. Your investments would not be deductible until you sell them or drop them.

If you have several sales a year though, your domaining is considered a ”business”. You sell names and you purchase names with the intent to sell them.

As a business, with an inventory of names, your cost of these acquisitions is a business cost.

The cost is the purchase price. There are no tax authority valuations. That would be crazy. Particularly with domain names.

Taxes are calculated yearly. Should your sales profit exceed the costs at the end of the tax year, you are eligible for tax; you have used business funds privately. (If you don’t have other business costs to deduct).

I don’t think any business in the US or elsewhere would be taxed any other way for this type of property. It would be way too complicated and wobbly.

How would an acquisition of another company be taxed? Would the IRS value the company and tax you on the value of it or would they deduct what the investment cost the company from the taxable profit?

Now I am completely done commenting on this offtopic topic.

 

[stewmath]

Tax man gets fuckall from my domain sales.

They get enough from my fulltime job

 

[GoKaizen]

https://www.dntaxguide.com

@Michael Cyger

Your logic that you can make millions in domains but as long as you can keep buying fresh inventory with profits, tax man never gets anything is dangerous I feel. @Michael Cyger has a site on domain taxes, what does that say..

 

[Nodws]

LOL I dont pay taxes, mexico doesnt care if you make less than 400k a year

 

[Chris Wright]

...sometimes I wonder why some people continue with their domaining without a profit.

For me, re-investing the sales proceeds enables buying and holding long term assets.

IRS makes everyone pay taxes on earnings with zero concern on what you spent it on.

In the U.S. this is only true for EMPLOYEES. Business owners, gamblers, and investors only pay on the profits that are left over after spending on deductible expenses and / or losses.

 

[Chris Wright]

@alcy what he is saying is that your domain purchases may not be treated as operational (deductible) expense for the year, unless you write them off. Just like you cannot buy a building and claim it as an expense.

In the U.S. a building is a business expense. As a pure investment , it may or may not appreciate in value. But as a business asset, you can depreciate it and write off depreciated value for tax savings.

 

[Recons.Com]

In the U.S. a building is a business expense. As a pure investment , it may or may not appreciate in value. But as a business asset, you can depreciate it and write off depreciated value for tax savings.

Exactly. You have to depreciate it. Now, should you depreciate domain investments or take full deduction the same year?

 

[ResoluteDomains]

Whether your good or bad at domaining it doesn't count assets or allow to value assets so the best domainers might be always showing a loss called turn over and reinvesting.
If every time you made a k you reinvested it then you will continue to show a loss to tax man.

In the US you can only show a loss/no-income for a certain amount of years before the IRS reclassifies your business as a hobby - provided you were already classified as a business.
https://turbotax.intuit.com/tax-tip...n-the-irs-classifies-your-business-as-a-hobby

 

[tonecas]

just move to Panama or Gibraltar

 

[Chris Wright]

In the US you can only show a loss/no-income for a certain amount of years before the IRS reclassifies your business as a hobby - provided you were already classified as a business.
https://turbotax.intuit.com/tax-tip...n-the-irs-classifies-your-business-as-a-hobby

I didn't see anyone refuting your assertion.

Even still, good tax strategies could help you defer tax liability until you have more substantial profits to pay taxes from.

 

[Chris Wright]

Exactly. You have to depreciate it. Now, should you depreciate domain investments or take full deduction the same year?

I.P. is amortized, not depreciated.

Reg fees are deductions. Drop catching fees are deductions.
Aftermarket domain acquisitions might be a deduction or an amortization. Depends on things that the IRS has only partially addressed.

Get the Domain Tax Guide, or a smart accountant, or tax lawyer.

 

[Recons.Com]

I.P. is amortized, not depreciated.

Reg fees are deductions. Drop catching fees are deductions.
Aftermarket domain acquisitions might be a deduction or an amortization. Depends on things that the IRS has only partially addressed.

Get the Domain Tax Guide, or a smart accountant, or tax lawyer.

No need for mentoring tone. Domain name is not an IP, you are confusing things.

Regarding Domain Tax Guide, funny story. I did want to have a look at it and went to look at the website. It said pay $79 for it. I was ok to pay and see if there is anything valuable there. But still decided to pm @Michael Cyger to see if he has any coupons for it. My mistake. He basically told me that to get it you have to also get DN Academy membership (the site few days ago also included that, so I guess you had to buy it via DN Academy?!) and then basically immediately after that they modified that website to raise the price to $179 still with DN Academy membership.

http://web.archive.org/web/20171008110738/https://www.dntaxguide.com/

His reaction to "I don't need the academy", was basically get a CPA then. Very similar to you, he assumes if someone is willing to look at Tax Guide or is asking questions, he doesn't have a CPA.

I guess it is hard to imagine that there are people that prefer to form their own understanding and have a meaningful discussion with their CPAs. I have yet to see a CPA that has a good understanding what to do with domain assets, hence my desire to see what other people in the industry do about it.

But apparently you and Mr Cyger would be wrong people to discuss this with.

 

[Michael Cyger]

I always try to stay positive in work and life. Positivity is a life force. It keeps me moving forward, not looking back. Dialogue and constructive feedback is positive too.

But when you (@Recons.Com) take a private conversation and make it public, out of context and without full details, I have to assume that your intention is to be destructive and negative.

His reaction to "I don't need the academy", was basically get a CPA then. Very similar to you, he assumes if someone is willing to look at Tax Guide or is asking questions, he doesn't have a CPA.

I never burn bridges, which is why I apologized to you in our private conversation about DNTaxGuide for the unintentional assumption and statement. See the image below.

I guess my apology wasn't good enough for you as you continue to defame my character and the products I work tirelessly to improve, for the sake of individual investors and the industry as a whole. Yes, I am a for-profit business, but if you add up all the time I spend working on content you will see that it's more a labor of love.

And truth be told, I spent more than $15,000 developing DNTaxGuide because I hired a forensic accountant and CPA to write the guide and a former IRS agent to edit it, as well as a professional copy editor and designer to put it together. I also spent countless hours, but only recovered a fraction of that investment. Sometimes you win and sometimes you lose when you're building a business. That's the beauty of capitalism.

So when you reached out to me asking for a coupon or discount code and told me you made $50,000 in the first quarter of 2018 alone, I wasn't moved to give away my intellectual property. Perhaps I thought you could afford $246 for DNAcademy to get DNTaxGuide included, I can't remember.

Clearly my suggestions don't matter to you, but other investors have options. They can go buy DomainTaxGuide.com (a competitor to my DNTaxGuide), or call Rick Schwartz, Michael Berkens, Mike Mann or any of a host of successful investors I've interviewed on DomainSherpa and ask them for referrals to their CPAs who likely understand tax treatment of domain names. Then pay one of those CPAs $150 per hour and get customized advice on your business and activities; or maybe suggest it to your CPA so s/he can improve their knowledge and the services they offer.

My entire goal for the past 6 years in the domain name industry has been to help investors do things the right way, the legal way, be positive, do the hard work, be patient, and hustle -- not waste time or money doing the things that don't matter.

It's a bummer that the last 6 years of me giving back to the industry by doing interviews with the most successful investors and greatest minds in the industry hasn't provided one single "get out of jail" card for an invalid assumption I made in a private conversation. I assumed you didn't have a CPA, but you said you did, so I apologized. That should have been the end of the story in my opinion, not a witty aside to be retold on a public discussion forum.

How negative a person are you to not move-on from that situation, even after we conclude the interaction with you saying "Best wishes to you too"?

Perhaps I wronged you in some other way and this is just the "straw that broke the camel's back?" Maybe, God-forbid, someone just got sick in your family or your dog just passed away. I don't know you or what's going on in your life. We all have issues we're dealing with that nobody else can see. But if I did wrong you, I welcome a private conversation with you to learn the facts so I can set the situation right.

People who read this discussion forum look at how others treat fellow investors. Is it with dignity and respect, or scorn and slander? Do they bully or defame others when they don't get their way, or do they try to resolve issues amicably?

I always try to do the right thing in every situation. When a person with a real name and picture reach out to me with a hardship and earnestly ask for assistance, I always try to find a way to help. That doesn't mean that I give away my time, nor devalue my products by giving them away.

He basically told me that to get it you have to also get DN Academy membership (the site few days ago also included that, so I guess you had to buy it via DN Academy?!) and then basically immediately after that they modified that website to raise the price to $179 still with DN Academy membership.

http://web.archive.org/web/20171008110738/https://www.dntaxguide.com/

Our private message exchange reminded me that I hadn't properly "retail priced" DNTaxGuide, which hasn't been for sale on the DNTaxGuide.com website for months. A more comprehensive review of the Wayback Machine would have revealed that lifetime pricing was previously $297 for DNTaxGuide (http://web.archive.org/web/20150227095036/https://www.dntaxguide.com/), and given we sell more lifetime tuitions to DNAcademy (for which DNTaxGuide is included for free) I thought it should have a retail price of $179 to reflect it's true value and that of DNAcademy. So after our interaction I updated the pricing. Nothing nefarious here. Just business as usual...constant small improvements on everything I do.

Life's too short to focus on negatives. There's too much to do, too much to accomplish, too many friends to make, and too many good times to have.

I wish you luck with your Regz.com business [https://www.namepros.com/threads/i-am-planning-to-start-a-new-domain-registrar.1072534/], but I won't be recommending it to anyone I know or speak-to based on your less than honorable interactions with me.

This will be the last time I interact with you. Good luck in life and best wishes to you in your future investing activities.

 

[Recons.Com]

@Michael Cyger

Way to go starting with introduction on staying positive and then going full throttle into negativity.

You are confusing things. I never had a private conversation with you. Direct Message does not necessarily constitute a private conversation, just like a support email or support ticket does not constitute private conversation. I addressed you in your capacity of owner of commercial project and a fellow community member (as I thought).

$79 is not a big deal and could have paid right away, but frugality never hurts, as well as networking, hence my contacting you. I never would have thought that it would trigger anyone to get greedy and raise price.

I distaste when someone tries to use a potentially good product (a Tax Guide) to push down the throat of the customers a potentially useless product.

Even after I wrote to you that it might be more suitable to starters, you did not stop with you pitch "If you're not a profitable investor every year, then perhaps DNAcademy is right for you."

And when I tell you that I am fine with my profits, just sell me your guide, then you tell me that I should get a CPA.

The only should advice I will give you is you should never tell people you don't know what they should or they shouldn't. Do you know my background? Do you know for sure that I don't have a CPA? I have worked as a tax manager for a major energy company in charge of multi-billion assets even before I did my MBA and here comes another "air vendor" telling me what I should do. And even with that experience I find it useful working with CPAs, but because of it I don't just passively seek advice. And I like to study/learn more, and hence my interest in someone's guide.

Your cost to develop this is irrelevant, sorry to burst your bubble. A customer doesn't care if it costed you a dollar or 100K, what customer cares is value proposition.

If I knew for sure that I will find your guide useful, I'd pay few hundred $ with no question asked, but you are selling a black box pretty much.

You accuse me of taking things out of contest, and yet you, just after revisiting the DM, still bend the facts. When you were pushing me to get your DN Academy, I did not yet mention my sales. I had to mention it so that you stop being offensive with your mentoring tone "if you are not profitable every year...".

And I am in shock to read that you consider selling access to your guide or providing coupon on it as "giving away your intellectual property". No surprise that you failed to get your investment back with this attitude. I wonder if Bill Gates feels he is giving away his IP every time Microsoft does sales on its products.

Quote from your long tirade: "I assumed you didn't have a CPA, but you said you did, so I apologized. That should have been the end of the story in my opinion, not a witty aside to be retold on a public discussion forum."

Actually, after I wrote to you that "I have a cpa. The point was if there is something in your guide that could have provided different perspective. Best wishes to you too.", you never responded.

Great job with 6 years of interviews. Never listened to any of those, but still appreciate the effort. You must be a great journalist, but that doesn't make you an authority on DN investment.

"Our private message exchange reminded me that I hadn't properly "retail priced" DNTaxGuide," you say and basically admit that you raised price because a fellow community member asked if a coupon was available.

You refused to provide a tax guide, but I will give you free business advice since you are still a fellow community member, albeit lacking in generosity and fairness department. When your product does not sell for $XX enough to recoup investment, it is not good idea to make it $xxx. You should have focused on promoting the project, making it attractive and less of a black box and then you wouldn't have alexa rank of 18MM+, which basically means under 100 visitors a month.

Now regarding the part where you say you won't be recommending me to anyone, now that you mentioned it, I wonder how I made it through four decades+ of life without your endorsement! Must be pretty outstanding achievement. You are truly full of yourself and I am glad you promised the above was the last interaction with me.

 

[golan]

Okay guys. Back to the taxation. I'm not in the US either. But i think that in any sane country, if i have for example a shop or e-shop where i sell some bolts or extinguishers or penis extentioners or whatnot, then when i go and buy a new party of extinguishers that would be my inventory, my re-stocking. Not any freaking investment that i can make only after taxes.

The same with domains. When i trade them on regular basis, and the same way as with extinguishers i sell them via my e-shop, which i actually do, then of course the domains are my stock, and purchasing new domains is re-stocking. That's how it was in one country where i resided before and now the same is in an another country where i moved my tax residency (Europe).

But another thing should be when i buy a $50K domain in aftermarket in hope to sell it for more. Then it's like buying a vintage collectible 1700's extinguisher, the $50K price is just not reasonable for my regular stock, so here i think this all is up to the local tax authorities to decide.

 

[Aaron.A]

You can't escape paying taxes, just delay them.

You could make 100k in sales each year and reinvest every penny on domains which would result in a loss when taking in running expenses.

But each year, your company added 100k minus the value of domains sold) in assets to it's books which are taxable when sold.

You can do this for as many years as you want

If after 10 years + of doing this, you sell the company (with assets) the government will get all taxes owed in one lump sum from a company valued at roughly a million.

But at the end of the day, no one wants to run a business that shows no profit and if you don't want to make a profit, then there is no point of doing it, unless you are a collector and if you're a collector then you're paying your taxes on a different income stream.

Sorry to be the bearer of bad news, but we are all trapped