Let's Talk Taxes

[Broker]

My tax guy/accountant just left. He was unaware of how much money is being made in domaining. He'd like to pick up his jaw after I showed him the YTD sales on DnJournal :kickass:


Anyway, So I asked him if I bought a name for $7 and sold it for $1,000 or $10,000 or even $100,000 do I have to pay taxes on that? His reply, it is taxable income.

That said, do any of the big auction sites or escrow/paypal report our individual sales or money transfers? Or do they simply report their earnings? As far as I can tell they dont report individual sales because I dont see anywhere under any of my accounts a place to submit tax information.

My reseller site and google adsense accounts do however.

Thanks,
HasRob........

 

[TheBulldog]

If your profits are more than 500, you should get a 1099-MISC.

 

[sags]

In Canada, if the governent considers the sales "windfall profits", they would not be taxable. Lottery winnings for example are not taxable in Canada.

If they consider them "capital gains" or "self employed taxable income", they would become taxable but would also provide a myriad of tax deductions such as the cost of annual registrations, rent/mortgage, insurance, vehicles, cellphone, travel, etc.etc.

I would love to pay the tax on the sales if I could "register" the domain names and write them off against my taxes. I would register enough domains that I didn't pay any taxes at all. The government would in effect be providing me a lot of cash to register domain names and I would be more than happy to pay taxes on the income they generate. I could sell the domain names at a loss and deduct that too.

I think the government is either avoiding the issue and doesn't want to open the floodgates to all the tax breaks to the many domainers who would never sell a domain but would simply enjoy the income, courtesy of the tax system.

 

[TheBulldog]

Actually, as a business, you can deduct the cost of the domains. At least in the US you can.

 

[capiche]

If your profits are more than 500, you should get a 1099-MISC.

True, but this is only with earnings through PPC.

Also, if you use PPC services that are based in another country,(i.e. Fabulous), you obviously won't be getting a 1099.

That said, do any of the big auction sites or escrow/paypal report our individual sales or money transfers? Or do they simply report their earnings? As far as I can tell they dont report individual sales because I dont see anywhere under any of my accounts a place to submit tax information.

I had this same question for Afternic, because of my sales that I used their escrow service for last year.

This was their reply:

"Domain sales need to be reported by the seller to the IRS on a "Honesty"
basis. Although we are disbursing the funds to you, the funds are not
coming from us and therefore we do not report it to the IRS."