Tax on domain sales?

[Kings]

Are there any taxes involved when selling a domain?

Say I buy a domain for $8.99 and sell it for $5000. Surely, there must be some sort of tax? Can someone give me any help?

(If it depends on the country you live in, I live in The Netherlands.)

Thanks!

 

[biggie]

keep this subject on the "down low" as we don't government taking a cut of the profits.

As is.....no taxes.

 

[Kings]

Originally posted by biggie
keep this subject on the "down low" as we don't government taking a cut of the profits.

As is.....no taxes.

That's good to know, thanks!

 

[jj2ii3344]

Yes, there is no tax associated with the selling of a domain name.

 

[Jeff]

Originally posted by jj2ii3344
Yes, there is no tax associated with the selling of a domain name.

Where did you see ("link") or hear this, jj2ii3344? :o
It's either a short-term or long-term "Capital Gains" tax, as I understand it (here in the U.S.), IMHO.
Thanks.

 

[DSL]

Man that kind of scared me... taxes on domains... *shudders*

 

[darksk8er]

that would suck.
I hate the goverment enough, I don't need more reasons to do so.

 

[Fusionhost]

Originally posted by darksk8er
that would suck.
I hate the goverment enough, I don't need more reasons to do so.

Agreed

 

[bigboss]

The only tax you might have to pay
would be the income tax

But as far as the resale tax there is none
Domain sales is considered an intangible item
thus no tax (I talked to the IRS people)

John

 

[Kings]

Originally posted by bigboss
The only tax you might have to pay
would be the income tax

But as far as the resale tax there is none
Domain sales is considered an intangible item
thus no tax (I talked to the IRS people)

John

Cool as Thanks for letting me know.

 

[VUI]

The only tax you might have to pay
would be the income tax

But as far as the resale tax there is none
Domain sales is considered an intangible item
thus no tax (I talked to the IRS people)

John

So if I sell a domain name for $1,000, I would *not* have to pay a "resale" tax, but I *would* have to include that income/profit on my tax returns and pay income tax on it?

 

[Mark]

Agreed with Wave ....

Where did you see ("link") or hear this, jj2ii3344? :o
It's either a short-term or long-term "Capital Gains" tax, as I understand it (here in the U.S.), IMHO.
Thanks.

If you Exchange / Receive any amount of "Worth" you are supposed to report it ~ If you go up to a certain amount - You are definitely going to pull some red flags up in your direction - Doesn't matter what Payment Service You are using ....

 

[domainsusi]

So if I sell a domain name for $1,000, I would *not* have to pay a "resale" tax, but I *would* have to include that income/profit on my tax returns and pay income tax on it?

Yes, you are definitely required to report the income on your US federal tax return. You MAY also have to report State Income. So far as I know, there is no State Sales Tax imposed (yet)....

 

[primacomputer]

This is a good question. Such a good one in fact, that years ago I decided to pay my solicitor for his professional opinion rather than risk a costly mistake based on the rumor mill. Anyone involved in a sale over a few thousands dollars should consider doing the same. I'm not a lawyer and can't offer a legal opinion. I'm just throwing this out in the hopes someone will find it useful.

I am only concerned with the USA (Individual) , HK (Individual and corporate) , and BVI (offshore corporation). Laws are different from place to place

Income:
In the USA and HK the proceeds of a domain sale are treated as income. This applies if you are an individual or a corporation and the relevant tax applies.

All income received by an Offshore BVI corporation is offshore and not subject to tax in the BVI.

Capitol Gains:
In HK there is no capital gains tax on a domain name, or much else for that matter.

In the US, a domain name my be considered a capital asset and subject to capital gains tax. The details of how and why are not constant and far too complex to go into here. A good assumption is that the IRS will take what they can. This is, after all, their job.

BVI offshore corporations pay no tax, capital gains or otherwise.

A few things of note:
Individuals subject to US tax, but living abroad may qualify to exclude up to $85,000 from their foreign earned income. This can be applied to monies received from sales of domain names.

A sale brokered by a HK company ,between two offshore companies, may be considered an offshore transaction and not subject to corporate tax provided the negotiations take place outside HK.

The same is not true in the US. Any income received by a person or corporation subject to US tax is subject to tax regardless of where they are.

Summary:
You need to take the same precautions to limit your tax liability with a domain name sale as you do with any other asset.

 

[RHOL55]

Legal help.....

This question has been of great interest to me also. Since the answer seems to flip flop between "yes an no" to taxes owed on the sale of a domain name, maybe it would be a good idea to have legal representation with the sale of a domain name worth substantial value. Then if the lawyer says "you owe no taxes" it can be on his head when the IRS comes knocking!

 

[snoop]

Of course a profit from a domain sale is taxable, the only time you might not pay tax is if the tax rate applicable is zero. The people you tell you it isn't taxable are dreaming really.

 

[Mark]

# 1 - Everything is Taxable

# 2 - No Attorney is going to "pop" in here and tell you yes or no for less than 200$ an Hour

# 3 - Peeps sure are pulling some old Threads out today - lol

 

[VisualArtistFrankBonilla]

The amount of the sale??

If a person spend $3000 in 2004 on registering domains, then sells one for $5,000, he didn't make $5,000, right? Wouldn't you just be liable for taxes on $2,000? Or, would you have to report $5,000 as income, but them be able to deduct $3,000 as expenses or losses somewhere else?

You have to remember, and keep records of all your purchases. (registrar has all these also).

Am I correct on this part?


Frank

 

[armstrong]

If a person ...

A person is not entitled to deduct expenses (check your tax form), so may have to pay full capital gains tax on the $5000. A business, on the other hand, that routinely buys and sells domain names can claim all domain-related outlays like purchases and registration fees as part of the expense of doing business.

CAVEAT: I am not a lawyer, and since tax matters can depend on your personal circumstances, when in doubt, consult with one.

 

[VisualArtistFrankBonilla]

Thanks

A person is not entitled to deduct expenses (check your tax form), so may have to pay full capital gains tax on the $5000. A business, on the other hand, that routinely buys and sells domain names can claim all domain-related outlays like purchases and registration fees as part of the expense of doing business.

CAVEAT: I am not a lawyer, and since tax matters can depend on your personal circumstances, when in doubt, consult with one.

Thanks Armstrong, good info.

Frank