Domaining - Tax implications

[Chappy]

Can anyone tell me what the tax implication of buying/selling domains are? Are domain sales subject to sales tax? Is this something that domainers typically "overlook"?

Thanks for your advice

 

[yandig]

Typically, you should report any gains on domain sales as a capital gain on your tax return(s). Domain sales are not subject to any type of sales tax as far as I'm aware.

 

[fonzie_007]

Domain sales I believe are only considered long term capital gains when you hold them over one year. If you do not, then they are short term captial gains that are subject to your normal taxable rate. However, if you use the money from the sale and buy another domain, you may not have to pay any tax based on 1031 like-kind exchanges.

 

[EbookLover]

For the real scoop, you need to speak to the IRS, you state's treasury/sales tax/revenue dept, and a competent accountant.

If your state has a sales tax, then most likely you will be required to collect taxes on domain sales. Either that or you will be required to pay sales tax on your domain purchases under the "Use" tax.

Again, for the real scoop, don't realy on hear-say. You may find yourself in a mess in a few years if you do.

 

[fonzie_007]

As far as I know, online sales do are not subject to sales tax unless they are sold to instate buyers.

 

[yandig]

here's a site that may be able to answer your questions:
www.fairmark.com

 

[EbookLover]

As far as I know, online sales do are not subject to sales tax unless they are sold to instate buyers.

Tax laws regarding online sales are changing. You can thank WalMart for that.

Even so, if you do not pay sales tax because you bought out of state, most states that have a sales tax require the buyer to report these sales yearly and pay their state's sales tax as a "use" tax, especially bsuinesses. Stupid, I know, but it's the truth as I have been told by accountants. I fyou look at most, if not all, state's sales taxes, they are not called "sales tax" but rather "sales and use tax".

But to get the real scoop, you need to contact an accountant yourself. never go by what others say.

Oh and by the way, as far as tangible goods, you must collect sales tax to instate buyers but rather to buyers who have the product shipped within the seller's state, no matter if the buyer is buying from out of state or within the state.

And for the record and for what it's worth, I do my own taxes and I file all my domain purchases (especially the ones I use for traffic or to build websites) as a marketing expense. Not sure if this is the correct way to do it but I'm not sure I care either

 

[Chappy]

Well, I am an accountant but I really don't know the answer!

I'll let you know if I find anything conclusive on this.

 

[EbookLover]

No offense, but it's VERY odd that you are an accountant and you came to a public domain forum to ask a tax question. Surely you have reliable sources and references at hand to get the real scoop.

Are you sure you don't work for HR Blockheads? Tax preps are not really accountants. LOL. J/K, sort of. But I really do hate HR Blockheads. Very incompetent, in my experience. Love Turbo Tax, though.

 

[Australia]

No offense, but it's VERY odd that you are an accountant and you came to a public domain forum to ask a tax question. Surely you have reliable sources and references at hand to get the real scoop.

Are you sure you don't work for HR Blockheads? Tax preps are not really accountants. LOL. J/K, sort of. But I really do hate HR Blockheads. Very incompetent, in my experience. Love Turbo Tax, though.

maybe accountantdiscounts.com can help

 

[Badger]

And all reliant upon in which country you live in of course..

But capital gains is subject to capital gains tax.. wherever you live. In the UK that rate is some 40%..

And if you buy another set of domains with the proceeds still does not negate you from paying the tax.

The problem for the IRS, inland revenue etc is that some internet goods are not tangible goods i.e. no physical item exists (such as a domain name). So monitoring and tracking these sales and transactions is all but impossible at the moment.

 

[fonzie_007]

long term capital gains tax is either 15% or 5% (depending on what marginal tax bracket you are in). Capital gains enjoy a rate preference compared to your marginal tax rate which can be up to nearly 40%.

 

[cache]

true you need to pay capitcal gain, but the question is WHEN you need to. The preference is as late as possible.

And all reliant upon in which country you live in of course..

But capital gains is subject to capital gains tax.. wherever you live. In the UK that rate is some 40%..