Thanks @Opus 17. To clarify your discussion of the capitalization, if I consider these domains as Schedule D investments, what happens in the following scenario?
Let's say I buy a domain name in 2015 for $10, and renew it each year from 2016 to 2019 for $10 each year. Then I sell it in 2020 for $100.
2015: ($10)
2016: ($10)
2017: ($10)
2018: ($10)
2019: ($10)
2020: $100
Are we saying here that, depending on how we interpret the 2018 tax reform law, it's possible I can't recover the 2016-2019 costs at all? So when I sell in 2020, my cost basis would be $10 (i.e., what I originally paid in 2015), and I would pay capital gains on $90, instead of $50?
Certainly it feels intuitively wrong that I owe tax on (almost) the full sales price without any recognition of all the registration costs over the intervening years. Do you think that's the case? Perhaps the solution is that these additional registration costs are not really carrying costs but somehow part of the purchase price? (Arguably I am purchasing the domain over and over when I re-register it, so maybe the value is the total amount I've paid? The last amount I paid?) Or, conversely, does the existence of these carrying costs at all imply that perhaps it is a schedule C business after all? (I guess not, since I don't see that in any of the IRS criteria for distinguishing business from hobby.)
Yikes.
