Tax Confusion

[capiche]

Do we just report our sales from last year on an "honesty" basis?

This is the first time I've had to worry about domain income for my taxes and I am a little confused as to how it works basically.

A few of the domains I sold, I used Afternic's escrow service for. Others were through Escrow.com or Paypal and then I also have PPC income from Fabulous added in there.

What all do I need, just a grand total to write down?

I thought I would have received some tax related forms from Afternic, Escrow.com or Fabulous.com., but I haven't received anything.

Thanks for any help.

 

[000]

Good question, I need to know the same thing.

 

[sags]

Good Question

I will claim the income if I can claim the business expenses. Capital gains losses, housing costs, office equipment, travel around the world to TRAFFIC conferences etc. Sounds like a fair deal to me.

 

[matt_bodis]

IRS does not know about Paypal transactions, and they will not "come after you" for something as puny as that.

IRS only knows of Paypal transactions if they request it from Paypal during an audit.

I'm not going to give you insider advice here, but one thing you MUST report with IRS is the revenue that you made where you had to fill out a W9 form. If you don't report that you will get a late-payment notice in the mail which comes with a nice fee.

If you don't report W9 income you will be added to an IRS loader database which will give you a higher chance of audits in the following years. If you try to trick them once, they know that there's a good chance you'll try to do it again. :D

PS

Legally you must report all income and losses. Even if it's via Paypal.

 

[capiche]

Thanks for the help.

I got this reply from Afternic:

"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 (buyer) and therefore we do not report it to the IRS."

I assume it's the same with the other escrow services.

I guess just I'll just report the sales as "other income" and move on.

 

[fonzie_007]

Declare all income you receive from domaining, regardless if it came from escrow, afternic, sedo, or pp. You should be able to log into your account at each respective place and download your history.

You will save yourself a lot of work in the future if you keep track of all your sales in an excel spreadsheet. This way you don't have to go back and search each site. If you are looking to deduct costs, you can also go to your registrar and they should have a history of all your purchases.

PS If you think the IRS is ignorant of what can happen with PP accounts, get real. The IRS and FBI are cognizant of PP and how it can be used to shield money. You will get hammered if you are audited and the IRS sees you shielding income.

 

[tricolorro]

Do we just report our sales from last year on an "honesty" basis?

This is the first time I've had to worry about domain income for my taxes and I am a little confused as to how it works basically.

:hi:

An accountant has written a PDF ebook called "The Domain Tax Guide 2007'.

It's $79 at:
http://www.domaintaxguide.com/

Patrick

 

[MinionDH]

Legally you must report all income and losses. Even if it's via Paypal.

If you don't know then play it safe and report everything. I personally keep a log of all domains bought/sold to make things easier during tax season.

 

[stscac]

Thanks for the help.

I got this reply from Afternic:

"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 (buyer) and therefore we do not report it to the IRS."

I assume it's the same with the other escrow services.

I guess just I'll just report the sales as "other income" and move on.

Nice followup.

:tu:

-Steve