Tax Write-Offs

[HLK]

I know this might not be the exact place to post this but I could not find a better forum for the subject.

I wanted to ask you guy's if you have any tax advice as far as business related write-offs for people making a living on the net.

I just spoke with my accountant and asked her if I could write-off
domain purchases. She said that a purchase of a domain was like
purchasing "inventory" and could not be written-off until sold.

I told her that I use these domains to make money and they were not just "inventory".

She then said that it would be considered an asset and still could not be written-off.

Only the cost of renewals in her opinion could be viewed as a business expense.

This is such a unique business that I feel we might need to dig real hard to find ways to write-off domains as expenses since it is by far the number one way that I spend company money.

If I can't then I will owe much of my earnings from last year and
I don't like that scenario too much.

Does anyone here have any info that could help save big dollars
at tax time?? TIA

 

[Nameable]

Originally posted by HLK
Does anyone here have any info that could help save big dollars
at tax time?? TIA

I am not a tax professional but... we treat domain registrations as leases. Our reasoning is that the fees paid (whether to a registrar or previous registrant) entitled us to use of the domain for a fixed period of time - not unlike an auto lease or office rental.

I'm guessing, though, that your accountant will say you can only expense (fee paid/reg term/12) per month as the fees are like prepaid rent. This could turn out to be a nightmare if you have a ton of domains and don't have their prices and registration dates in excel or some other easy to manipulate format.

 

[cyphix]

Yeah... when I did my tax last year I said to him that if you don't keep paying the yearly expense you won't have the domain anymore.

So.... I wrote them off anyway!