Business & farm

Certainly it would be easiest for me to just continue to treat the domain trading as a Schedule C business as I've done for years now. The only relevant question for me is whether it's appropriate/legal to treat it that way: i.e.  should they always have been personal property (Schedule D investments)? Or should I have converted them to personal property at the end of the first year when I gave up actively pursuing this business?

 

It's definitely not worth my time to try and figure out how to maximize my deductions or anything; the simplest legal/appropriate method of handling this is what I'm going for here.

 

It seems like my options are these:

  1. Continue to treat this as a Schedule C business as always (with the domains as inventory).
  2. Close the business, converting the domains to personal use ("purchases withdrawn for personal use"), and paying Schedule D capital gains on the cost basis for any future sales.
  3. Simply ignore previous years, treating the domains as Schedule D personal property from now on, and paying Schedule D capital gains on the cost basis for any future sales. (Optionally, amend all the previous returns, though frankly I don't see myself getting around to that.)

 

What do you think? I'm not sure if there's a net difference in taxes I owe between options 2 and 3 or merely a recordkeeping discrepancy.