Sold domain name in 2021 but got paid in 2022. Which tax year to report?

[roni1]

I bought a domain name in 2019, sold it in 2021 through a domain marketplace, and only received the money from the marketplace onto my Paypal account in 2022. I'm planning on reporting the proceeds as long term capital gain as the domain was bought personally and remained unused.

- Should I report this transaction in my 2021 filing or next year in my 2022 filing, since the proceeds were received in 2022? I would prefer to wait until the next filing if possible.

- Can I deduct the marketplace sale fees? Should I increase the cost basis by the fees or...?

Thank you!

[MinhT1]

As you only receive the payment in 2022, you should report this transaction in tax year 2022. And sales fees can be deducted from the sale price in calculating the capital gain.

[roni1]

What constitutes "receiving" in this case? The money was sitting as "credit" on the domain broker's platform. Then I transfered it to my Paypal account several months after the sale. So in this case "receiving" means when it hits my Paypal account? I guess I'm fuzzy on why credit in my Paypal account would be treated differently than credit in my domain broker's account.

What's the mechanism in TT to report the broker fees?

[JohnB5677 · Accepted solution]

The transaction date is the date when two parties agree to make an exchange. The posting date is when the transaction is received to your account.

In stocks, the transaction date is considered the date of the transfer.  I expect that this sale would be treated similarly.

The broker's fees can be included in the cost basis of the Domain name