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Sold domain using escrow.com. Placed 1/2 money in pre-tax IRA, Do I still report entire amount in my taxes as capital gains or just half?
Hello,
I sold a domain name and collected the funds pre-tax using Escrow.com. I placed half the money in a pre-tax IRA. Will I still need to report the entire amount on my taxes or just the half not within the IRA. Also I am assuming it is being treated as capital gains, please let me know if otherwise. Thank you.
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Sold domain using escrow.com. Placed 1/2 money in pre-tax IRA, Do I still report entire amount in my taxes as capital gains or just half?
Yes, you will have to pay tax on the gain, then receive a deduction for the contribution if you have earned income to use for the contribution. Selling a capital asset is not considered earned income and is, therefore, not eligible for a pretax contribution to an IRA. Without other earned income, you will receive no deduction for the IRA contribution.
The only way this would work differently is if you file a Schedule C for the business of owning and selling domain names or you sold a business using this domain name and have earned income form that business prior to the sale.
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