I know what you mean. First I have to go out and get a job and then take all kinds of junk from the boss to get paid each week. I don't think the IRS deserves anything, do you???
Unfortunitly, the law says that you generally must pay taxes on the money you get, and only under certain cercumstances is it partly or complety exempt from taxes. It's up to you if you declare your sales of a domain, car, or other property. If it's a small amount it may be worth the "risk" of getting caught, since they are not likely to come down on you too hard, but if it's a big sale, you should declare the "profit" on your tax return.
How much taxes you pay will depend on what your tax bracket is, but I figure it's going to be 30%-35% and I keep some of the money so I can pay my taxes in April. If it's a lot, you should pay estimated taxes so you don't get a penality, but the fine is pretty small (check with your tax person or the IRS to find out what it would be). I'm paying estimated taxes of low $x,xxx every 3 months.
Now, paying taxes sucks, but there is good news and that is that you don't have to pay as much as you think. Even if you have a regular job, you can have your own business buying and selling domains or whatever you want. This requires that you start keeping records for your business, but you don't need to incorporate or get a license generally (check local laws and regulations).
Once you decide to have your own business you can start to deduct many things from your income tax that you could not do previously. What kind of things? Anything related to your business. For me this includes my internet connection, my computer, my second computer, my wife's computer, the 3 new LCD monitors I bought this year, all the costs of buying domains, Paypal fees, web hosting fees, computer magazines, software, business magazines, and so on. Then when you sell a domain, you pay taxes on the PROFIT from the domain. So if you buy a domain for $50 that is an expense and you keep track of that as a deduction. Then if you sell the domain for $450, you have to declare profit of $400 and pay taxes on that.
If you sell the domain for $10 because you don't want to renew it, then you have a loss of $40 and you can deduct that from your taxable income. You may think that sucks, but the deductions can lower your tax bracket and "save" you money.
I'm not a tax professional and you should either study up on all this for yourself or hire a tax person to do your taxes. A good tax person may cost serveral hundred dollars, but they can save you much more if they know what they are doing. I paid $350 to have my taxes done this year... and that's another deduction.
