I usually use "bilfin" when posting on web sites and I may have posted the message I'm responding to but I'm unsure. The info posted is exactly the way I've been filing my yearly IRS form and the personal describion sounds like me. About the middle of last year, after many tests at the Mayo Clinic, I was told I have severe heart problems. The medications I'm using has effected my short term memory. I'm still in the domain name business and the way I report my profits and expenses is as follows. I still use schedule C, I report the domain names sold each year along with the amount received then I deduct the total cost of sales fees, along with the total yearly registering fees paid from Jan. 1 thru Dec.31 of the year. This changes a little from year to year because of fee increases. If I have any other expenses related to registering and sales fees I add them into my expenses. From time to time I show a loss on my business. I also from time to time made considerable profit which I pay taxes on. I really don't know if I'm doing this right but it does show my profit and loss each year and I'm planning on continueing until I'm told other wise by the IRS. They don't seem to have an exact way that fits everybody who registers and sells domain names. I don't believe anybody actually owns domain names. You only have owership rights so long as you pay the yearly registering fees and the names are selected on a first come first served basis. I currently have a 100 or so names but I don't "own" any of them. The IRS calls this your inventory and they want to know the total value of them every year. The only way I know how to report this is add up the total cost of registerion fees each year, which is easy to do. The true value cannot be determined until the name is sold or "transferred" to another "owner" and even then it can change because its actually worth whatever amount a new buyer is willing to pay. I would appeciate hearing from anyone who knows of a better and legal way to report to the IRS.
