discuss US Taxes Due Soon - How To Classify Your Domains In 2016?

[Cdomains]

Taxes will be due soon in the US. Recently there have been some changes mentioned on the net pertaining to the classification of domains for tax purposes. I am still confused, as there still is no definitive answer. Are you?

If you live in the US how will you classify your domains for tax purposes in 2016 - expenses, assets, other?

Also, has anyone bought one of the eBooks offered on the net through DomainSherpa and others about handling taxes for domainers, and if so what do you think about that eBook, and do you recommend one?

 

[Derick R.]

I'd like to know too, I have a sale or two that went through Sedo last year,and more often than not simple quick Paypal transactions..

 

[Cdomains]

I am still waiting for the views of other domainers here as to what they do and how they classify their domains.

 

[Cdomains]

anybody want to weigh in on this issue?

 

[brindle123]

I've paid taxes on domain sales just to cover my butt. I've never listed them as an expense but should.
I'm sure other on here can help though.

 

[inforg]

I list renewals and acquisition costs as an expense, just like hosting, software or anything else.

Been doing this for years without an issue.

It makes it really easy. Sales minus expenses = profit. Now if you are a domainer that invests in high dollar domains, it would probably be better to classify as assets.

 

[Cdomains]

I've paid taxes on domain sales just to cover my butt. I've never listed them as an expense but should.
I'm sure other on here can help though.

Of course you should pay taxes on domain sales.

What I want to know is how other domainers from the US are treating their domain names for tax purposes - as expenses, assets, or something else?

 

[Cdomains]

I list renewals and acquisition costs as an expense, just like hosting, software or anything else.

Been doing this for years without an issue.

It makes it really easy. Sales minus expenses = profit. Now if you are a domainer that invests in high dollar domains, it would probably be better to classify as assets.

I find the whole thing quite confusing. You are suggesting to treat domains two different ways. Low value = treat as expense, and high value = treat as asset.

I am not an accountant, but I wonder if you have to choose one or the other, and not both?

There does not seem to be a definitive answer anywhere.

Has anyone bought one of the eBooks for sale by Domain Sherpa or elsewhere on the web that deals with this issue?

I wish one of the Sherpas would weigh in on this issue as they deal in a lot of domains and do this for a living.

It would be really great to get their input before the US tax deadline comes.

 

[Fliper]

I have no idea as I live outside US but just wondering if anyone of domainer is also certified irs agent? I need little guidance. Cheers

 

[Cdomains]

I wish Ali Zandi, or Domain Shane, or one of the other Sherpas would give their expert advice and tell us what they do. It would really help a lot of us US domainers just before tax time here in the USA.

 

[inforg]

There isn't one way to handle them. It really does depend on your business structure, business goals and the dollar value involved.

Your best bet is to consult a tax professional. All I can do is tell you how as a long term hobby domainer and someone who has maintained a home based sole proprietorship for many years, how I have handled it.

everyone should at the very least file a schedule c as a sole proprietor. This allows you to write off your expenses, and can even include your home office, computer equipment and more.

 

[DU]

It makes it really easy. Sales minus expenses = profit.

And how to you classify those expenses? Amortized or not?
And how do you classify that profit? Capital gains or Income?

OP:
Talk to an accountant or do proper research. "I read it on Namepros" is not a reasonable defense to the IRS.
Also - many people lie on their taxes and more people lie about the way they do their taxes and most people just don't get caught doing it wrong.

Very experienced members have been caught in the wrong by seasoned accountants (because some don't like)

 

[biggie]

I wish Ali Zandi, or Domain Shane, or one of the other Sherpas would give their expert advice and tell us what they do. It would really help a lot of us US domainers just before tax time here in the USA.

as @inforg stated, best to consult a tax professional

because a domainer may not be around if you get audited

imo...

 

[WhoaDomain.com]

Awesome Post! going to watch this. need this info for sure. Thanks!

 

[brindle123]

everyone should at the very least file a schedule c as a sole proprietor.

That's a good idea. Thanks.
I just downloaded the form from the IRS. I'll go over it before doing my taxes this year. Hope it helps me some.

 

[Cdomains]

I am not looking for tax advice here or whether or not to do this as a business entity or not.

To make this easy, lets just call this a survey.

If you live in the US and are a domainer; do you classify your domains for tax purposes as:

A - an expense
B - an asset, or
C - other

 

[JB Lions]

Taxes will be due soon in the US. Recently there have been some changes mentioned on the net pertaining to the classification of domains for tax purposes. I am still confused, as there still is no definitive answer. Are you?

If you live in the US how will you classify your domains for tax purposes in 2016 - expenses, assets, other?

Also, has anyone bought one of the eBooks offered on the net through DomainSherpa and others about handling taxes for domainers, and if so what do you think about that eBook, and do you recommend one?

an ebook? An accountant is not that much, I pay $225 currently. Had another one when I lived in another state, was under $200. I know when I first started, I thought it would cost a lot, be some big deal. It's not.

It's pretty easy, income and expenses. I have a folder. Left side, income, right side, expenses. I just hand it to my accountant.

My income = domains sold, parking revenue, affiliate revenue etc.

My expenses = domains bought, domain tools I pay for, advertising, hosting etc.

Just get an accountant. They'll walk you thru it.

 

[Cdomains]

Just get an accountant

From what I have been able to learn, most accountants have no idea how to classify domains for tax purposes. Most are not even aware that this is a business.

Apparently even the -irs can not or will not give a definitive answer to this question.

I just simply wanted to know what other domainers have been doing. That's all.

 

[JB Lions]

From what I have been able to learn, most accountants have no idea how to classify domains for tax purposes. Most are not even aware that this is a business.

Apparently even the -irs can not or will not give a definitive answer to this question.

I just simply wanted to know what other domainers have been doing. That's all.

I don't think you've actually talked to an accountant. The 2 I've used haven't had any issues. This is what they do for a living. This business isn't that complicated, I'm sure they deal with many more that are. Just go see one and explain what you do. Go talk to an accountant is always the right answer.

 

[MisterSoft.com]

At the end of every year, your domain parking company is supposed to give you a TAX Form called "W9 form" that lists all the information about your revenues. Based on that W9 info, your accountant can file papers on your behalf. Of course, you can claim "domain renewals", laptop/software purchase etc as your expenses.
Hope it would help my esteemed fellow-domainers who reside in the United States.
Cheers

 

[Kate]

Some questions that need to be answered first:
Are you incorporated, or selling in a personal capacity ?
If you are incorporated, an LLC isn't treated the same as a corporation taxwise: with an LLC any profits (or loss) would be passed through to the personal tax returns of the owners. A corporation will submit its own tax return but IANAL and I'm not a CPA either.
Is selling domain names your main business, or did you make occasional sales ?
Some revenue may even not have to be reported...

The right approach will depend a lot on your personal circumstances, so I think the best is indeed to talk to an accountant.

 

[Nile Patel]

Taxes will be due soon in the US. Recently there have been some changes mentioned on the net pertaining to the classification of domains for tax purposes. I am still confused, as there still is no definitive answer. Are you?

If you live in the US how will you classify your domains for tax purposes in 2016 - expenses, assets, other?

Also, has anyone bought one of the eBooks offered on the net through DomainSherpa and others about handling taxes for domineers, and if so what do you think about that eBook, and do you recommend one?

This is very nice topic to discuss and i have been quite confuse with different accountant's view as they are not specialized in domain industry and everyone treating domain name income as different level based on your company structure or personal information given to cpa.

We would really appreciate if some experienced tax expert in this industry post their business info or some domineers post their cpa's info who is expert in this field so we can reach them and use their expertise directly.

Regarding talking about this topic everyone going to have different view and different option apply based on income numbers so i think Tax expert's advice is the only way to go but information about all kind of option is also very important, atleast we can talk different scenario with our own cpa so guys lets just talk about different options here so everyone get aware of it.

 

[Fliper]

I'm too looking for CPA to help me in filing 1040tax returns for the first time.

 

[sbweb]

an ebook? An accountant is not that much, I pay $225 currently. Had another one when I lived in another state, was under $200. I know when I first started, I thought it would cost a lot, be some big deal. It's not.

It's pretty easy, income and expenses. I have a folder. Left side, income, right side, expenses. I just hand it to my accountant.

My income = domains sold, parking revenue, affiliate revenue etc.

My expenses = domains bought, domain tools I pay for, advertising, hosting etc.

Just get an accountant. They'll walk you thru it.

This is the way. Write off your domain purchases as business expenses. When you sell a domain, that counts as business income.

Business income - business expenses = Total gain or loss

 

[Cdomains]

Some questions that need to be answered first:
Are you incorporated, or selling in a personal capacity ?
If you are incorporated, an LLC isn't treated the same as a corporation taxwise: with an LLC any profits (or loss) would be passed through to the personal tax returns of the owners. A corporation will submit its own tax return but IANAL and I'm not a CPA either.
Is selling domain names your main business, or did you make occasional sales ?
Some revenue may even not have to be reported...

The right approach will depend a lot on your personal circumstances, so I think the best is indeed to talk to an accountant.

Assuming domains is your business and not a hobby and you are incorporated, all I have been asking all along is simply what others are doing. Just for information purposes.

Anyone who has been doing this for more than a year should have had to file taxes. That being the case all I want to know is how other domainers have been classifying their domains for their taxes.

That's all I wanted to know. I am not asking for tax advice and I realize that an accountant should be consulted.

It is a simple request really. How are other domainers classifying their domains - as assets or expenses?