I was told by a tax attorney that domain names are considered an intangible asset. When I sold my main domain name I paid a much lower tax rate because if this.
https://www.thetaxadviser.com/newsletters/2016/may/how-internet-domain-names-are-taxed.html also does into detail on this.
"CCA 201543014 addresses three issues regarding the acquisition cost of domain names. The first issue is whether the cost the taxpayer incurred to acquire a generic or nongeneric domain name from a secondary market and then used in the taxpayer’s trade or business is currently deductible under Sec. 162 or must be capitalized as an intangible asset under Sec. 263. The IRS concluded that the costs must be capitalized because the cost of the domain names will provide a future benefit to the user, regardless of whether the domain name is generic or nongeneric. Therefore, the cost of the domain name should be capitalized under Sec. 263. Sec. 263(a) provides that “no deduction shall be allowed for—any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate, … [or] any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made.”
Additionally, Regs. Sec. 1.263(a)-4(b)(1)(i) requires a taxpayer to capitalize any amount paid to acquire an intangible, and Regs. Sec. 1.263(a)-4(c)(1) also provides a taxpayer must capitalize amounts paid to another party to acquire any intangible asset from that party in a purchase or similar transaction. Clearly, the IRS takes the position that a domain name is an intangible asset in which the costs must be capitalized under Sec. 263 and not deducted currently under Sec. 162."
