Treating domain sales as "Capital Gains"

[rickkumar]

Hi,


I have one very specific question regarding domain-sales. (not regarding ppc income, which I just treat as income)

Q: Which USA tax form will you use (Schedule C, Schedule D, Or some other form) for treating domain sales as "Capital Gains"?

I am asking this question because different tax forms have different treatment for capital gains. For example, if you treat domain sames just like stocks, then you have short-term and long-term capital gains depending upon how long you held the stock/domain.

So which form is more appropriate?

Any tips/suggestions/ideas are all welcome very much.

Thanks.

 

[DNQuest.com]

How are you running your "domain business"? (something you should have decided to do when you start into the business). If you treat it as capital gains, you can only claim the registration fees you used in domain you actually sold. This means if you bought 100 domains and sold 5 of them, you can only claim the 5 registration fees. If you treat it as a business (which is optimal), you can claim all registration and associated costs with running a domain business and all revenue associate with that business (IE- sales, PPC, affiliates). It is wise to keep your "domain" finances separate from personal finance if you do it that way.

 

[shockie]

agreed with dnquest. you'd get more dough net if you expense ALL costs and whatnot

 

[rickkumar]

How about using Schedule-C for: all the expenses (including registration/renewal fees) and ppc income, and

then using Schedule-D for: domain sales treating them as capital-gains (acquisition cost of sold domain will be ZERO because expenses are already deducted on Schedule-C and entire sale will be subject to capital gains in this case using Schedule-D)?

This way all your expenses will be deducted from your ppc income and you pay capital gains tax only on the sales. Also this way you only pay long-term 20% tax if you sold the domain after 2 years of owning it.

I heard some people using this as this appears most optimal and reasonable way to do it.

What you guys think?

 

[DNQuest.com]

I believe you can't do both in this, but I can't be 100% sure. I think the revenue is reported on your income line with expenses on schedule C. Personally, I am registered as a corporation and use simple revenue/income where appropriate.