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Domain Taxes

Domain Tax Tip

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I should preface this post by saying I am not anything close to a tax expert, and in fact, I received a D in Financial Accounting in college (granted I was pledging a fraternity). Nevertheless, I want to talk about taxes with regards to your domain business. I know it's barely September, but if there are things you can do to lessen your tax burden before the end of the fiscal year, now is the time to do it.

The tax problem I generally have with my business is that I frequently spend quite a bit on acquisitions after a big domain sale, and taxes are an after thought.   For example, after selling a domain name for $80,000 and making a $40,000 profit, I am often inclined to go out and buy a $70,000 domain name.   However, assuming a 35% tax rate (state and federal combined), I would owe the government $14,000, leaving me with $66,000.   Since taxes aren't taken out at the time of the sale, I might feel safe spending $70,000, but if I develop the new name, I have to come up with the extra $4,000.

That said, there are ways to → Read More