question Is it possible to treat a domain sale as capital gains?

[william]

For any accountants here (from USA) or someone who has dealt with it, is it possible to qualify for capital gains tax (vs normal tax) for a domain name sale?

What proof would such qualification require to file it as such? The complication is that I happen to sell domain names. Regular domain name sales are automatically qualified as sales, and they are subject to higher taxes. But what if there is a domain name that wasn't part of this business? Additionally, I have not claimed this domain name as a purchase/expense or asset on my taxes at any point.

Thanks for any input.

 

[Kingslayer]

I'm not from the US, but If buying and selling domain names is not your full time job, it will be capital gains.

 

[Keith]

My CPA qualifies my sales as capital gains. In this case, it’s advantageous to hold the assets for at least a year.

 

[william]

My CPA qualifies my sales as capital gains. In this case, it’s advantageous to hold the assets for at least a year.

But what are the requirements for that? We can put anything on taxes, but if there is an audit, how do you prove that it is capital gains?

 

[biggie]

Hi

if/when you get the time....
https://www.irs.gov/taxtopics/tc409

there is a lot more to it, if goal is to reduce tax rate.

imo...

 

[Keith]

But what are the requirements for that? We can put anything on taxes, but if there is an audit, how do you prove that it is capital gains?

The domains are not operating as a business but instead bought as an investment.

I don’t know all the rules which is why I hire a professional.

 

[Kai W.]

From ChatGPT.
And this is why you should have your own e-commerce website

 

[william]

From ChatGPT.
And this is why you should have your own e-commerce website
Show attachment 246323

Ok, thanks, Keith. I guess I'll need to ask an accountant about it!

 

[NameInbox]

 

[william]

Sorry, I should've specified I am referring to long-term capital gains.

 

[Bravo Mod Team]

I am referring to long-term capital gains.

Your accountant or tax professional should be able to help you classify them accordingly on your balance sheet so that they will qualify, but that should be done prior to them being sold, among other things. They’ll go over all of that with you. It’s straightforward.

 

[NameInbox]

 

[NameInbox]

Your accountant or tax professional should be able to help you classify them accordingly on your balance sheet so that they will qualify, but that should be done prior to them being sold, among other things. They’ll go over all of that with you. It’s straightforward.