How to file domain name investment in Taxes?

[SIKHboy]

Hi everyone,

I want to file a taxes, I made a purchase of domain name plus website for low to mid x,xxx . The site does not operate anymore, and I want to file a taxes, the site is not live any more, basically I was told something else, and the site did not made any money. I want to put that in my loss as a online business, but I still have the domain name (which does not value more than 50 bucks )

so how do i file taxes, all the suggestions are welcome, I want to include this in my online business, and put that as a loss which I actually took a slap of this on face. :(
I have never filled online business tax before.


Thanks for all the suggestions.

[Gerry]

Hi everyone,

I want to file a taxes, I made a purchase of domain name plus website for low to mid x,xxx . The site does not operate anymore, and I want to file a taxes, the site is not live any more, basically I was told something else, and the site did not made any money. I want to put that in my loss as a online business, but I still have the domain name (which does not value more than 50 bucks )

so how do i file taxes, all the suggestions are welcome, I want to include this in my online business, and put that as a loss which I actually took a slap of this on face. :(
I have never filled online business tax before.

A little late to be asking for this advice.

Personally, if you plan on doing this as a business then get appropriate business license, LLC, etc.

Otherwise, it may be considered as "passive activity" and not subjected to claimed income or losses.

This all takes a great deal of planning ahead and getting all your receipts in order. It is not as simple as it may seem as it typically involves tax schedules A, B, C, sometimes D, S, and SE.

If you had income from the name, that must be reported as well. Same goes for all domains or parking services. Typically this will be in the form on a 1099-misc.

You had better study up on this or talk to a tax consultant or attorney.

[Electric Star]

First question: What country's taxes are we talking about?

Actually, from the accounting standpoint (and I am an accountant), the answer to your tax questions are really dependent on what you are doing in this business. There are actually quite a few ways to handle this for tax purposes, and it all depends upon what you do.

• You might have an actual operating business, perhaps developing websites for your own profit or building them for others. If this is the case, you need to be keeping accurate records of ALL the transactions, income and expenses, that you have. If you were keeping these records, the expenditure for this website would already be recorded. In this case, you would not be able to record a loss for this transaction without also showing gains from the rest of your business.
• If all you do is simply buy and sell domain names, you might qualify to treat them as investments, in the same way that an investor would buy and sell a stock in a company or a gold coin. This is not likely you.
• If this is a hobby, you should still be keeping records. If you don't have a business plan to make money, this could be you. In the US and Canada (places I am familiar with), you would need to claim as income any profits from your hobby, but cannot claim a tax loss for a hobby loss.

Frankly, if there is a possibility that the loss may be worth more than a few dollars, and in any case if you plan to do this seriously, it will save you money in the long run to buy an hour of a local accountant's time to get started the right way. They will charge you some for their service, but their job is to make you money in the long run.

(Although, realistically, if you are in the US and facing the deadline this week, file for an extension and deal with this next week. That's what the extensions are for. US accountants who specialize in tax issues aren't taking new clients this week.)

Good luck to you!

[biggedon]

Hi

if you bought a website and the domain, and you still have the domain....then you still have your investment.

you will have to re-develope the domain or find other way to monetize it, or sell it.

in the year that you do that, the following year is when you make your claims.


1. the original acquisition cost, plus renewal fee's, Hosting, etc.

2. the amount you sold for

3. the difference

typically, the irs will frown on that, unless you have other income or history of filing such expenses or "other income"

for instance


income from ppc's, and the expense of domain purchases

those are logical, with a yearly fluctuation.....but the expenses cannot outweight the income for more than a few years as a practice.


however, in this economy... losses are predicted and expected.


imo...

[SIKHboy]

Hi

if you bought a website and the domain, and you still have the domain....then you still have your investment.

you will have to re-develope the domain or find other way to monetize it, or sell it.

in the year that you do that, the following year is when you make your claims.


1. the original acquisition cost, plus renewal fee's, Hosting, etc.

2. the amount you sold for

3. the difference

typically, the irs will frown on that, unless you have other income or history of filing such expenses or "other income"

for instance


income from ppc's, and the expense of domain purchases

those are logical, with a yearly fluctuation.....but the expenses cannot outweight the income for more than a few years as a practice.


however, in this economy... losses are predicted and expected.


imo...

Ya, I have reported my google adsense and all the income etc.


Yup this last year was a loss. overall= comes in loss. not a good year (2009)

[fatter]

First question: What country's taxes are we talking about?

Actually, from the accounting standpoint (and I am an accountant), the answer to your tax questions are really dependent on what you are doing in this business. There are actually quite a few ways to handle this for tax purposes, and it all depends upon what you do.

• You might have an actual operating business, perhaps developing websites for your own profit or building them for others. If this is the case, you need to be keeping accurate records of ALL the transactions, income and expenses, that you have. If you were keeping these records, the expenditure for this website would already be recorded. In this case, you would not be able to record a loss for this transaction without also showing gains from the rest of your business.
• If all you do is simply buy and sell domain names, you might qualify to treat them as investments, in the same way that an investor would buy and sell a stock in a company or a gold coin. This is not likely you.
• If this is a hobby, you should still be keeping records. If you don't have a business plan to make money, this could be you. In the US and Canada (places I am familiar with), you would need to claim as income any profits from your hobby, but cannot claim a tax loss for a hobby loss.

Frankly, if there is a possibility that the loss may be worth more than a few dollars, and in any case if you plan to do this seriously, it will save you money in the long run to buy an hour of a local accountant's time to get started the right way. They will charge you some for their service, but their job is to make you money in the long run.

(Although, realistically, if you are in the US and facing the deadline this week, file for an extension and deal with this next week. That's what the extensions are for. US accountants who specialize in tax issues aren't taking new clients this week.)

Good luck to you!

Electric star have you gotten clarification from IRS on the buying and selling of domain names being considered an investment like stocks and bonds, when I contacted them besides the 10 people who had no idea I was sent an email saying for people who buy and sell domains they are treated as inventory in the same way you would buy and sell widgets so i should do a schedule C, unless I built a brand around an individual name they did say it is still a grey area because there was no case law yet, I would love to have it be treated as an investment because i would only have to pay 15 percent long term capitol gains on most of my names.
Joe T

[tractor]

This may help, I'm not a US citizen but is linked from Jamie Parks blog domainerdeveloper.com

http://www.domaintaxguide.com/