Home Office Domainers Tap Last-Minute Tax Strategies & Tips During Holiday Season
The holidays are approaching. What's the perfect gift for corporate employees or executives nervous about layoffs - and hoping to secure their future, possibly from a home office?
An Internet domain name - and the tax advantages it can bring to a fledgling home-based business.
For those not versed in the concept, domain names are the Web "addresses" typed into Internet browsers to land at pages like The New York Times (www.nytimes.com), The Wall Street Journal (www.wallstreetjournal.com), or two of my favorites, Home Office Highway (www.homeofficehighwayy.com) and MyDaddyWorksInHisUnderwear (www.mydaddyworksinhisunderwear.com).
More than an address, think of domains as businesses looking to take root, secondary businesses whose revenues can bolster existing businesses, the online branding of an existing retail or services company, or an investment in a child or grandchild's future.
And they can be perfect gifts.
Domain can be a person's name (www.jeffzbar.com) or a business name (www.macys.com) or (www.smallbusinessadvocate.com).
For less than $10 each at a service like GoDaddy.com (www.godaddy.com), anyone can register a domain name - assuming it hasn't been taken already. At services like GrandNames.com (www.grandnames.com), people can buy popular "generic domains," or URLs built of two or more words that create a unique message, like Average-Joe.com, CandyHere.com, iNeedADivorce.com, TrackVotes.com, StudentMarketer.com, AMatterofHealth.com, FullPriceForYourHouse.com or PayLoansOff.com.
To find out if a your name, your kid's name, your comapny name or a phrase is availble, in the middle of the GoDaddy home page is a Search box. Type in your chosen URL (uniform resource locator, another name for a domain name), and see if it's available.
For those hoping to turn domains into a business - or help a friend or family member do so, a person can buy a domain and begin to see modest revenue streams or impressive returns in months or even weeks by setting up Google Adsense, affiliate programs, selling third-party advertisements directly or selling your own product from the site.
Domains also bring near immediate tax breaks - and stability for tomorrow.
"People have lost control over their jobs, their 401(k)s and their futures. Domains offer a way to take back control of their lives and futures," said Owen Frager, creator of GrandNames, a marketplace for domain names. Frager helps people transition from corporate employee to entrepreneur.
"Domains have been called the real estate boom of the 21st century. And frmo the very beginning, they offer significant tax breaks."
Consider these three tax-smart domain strategies:
- Tax deductibility. From the cost of purchase to the expense of hosting, building and maintaining a site, expenses can be tax deductible or depreciable as assets or inventory. If run from a dedicated hom office, a domain business may allow for tax deductions related to the home office.
- Charitable contributions. Stocks and investment have plummeted, yet people want to give. Those who donate domains to philanthropic groups may deduct the value of the donation; the charity then sells the domains to raise money. "Domain name donors can reap big tax deductions as if they were giving away cars or cash," wrote The International Herald Tribune.
- Gifts to minors. Domains as gifts to children or grandchildren are not taxable to certain thresholds. And the position the minor recipient for a future in entrepreneurship. Think of domains as the new Savings Bonds. "If you put $1,000 in a college amount or a mutual fund last year, it's worth $500 or less," Frager said. "If you bought a $10 domain, it could be worth $1,000."
Remember, to take the deduction as a business expense on the current calendar year for your company or as a Schedule C attachment to your personal income tax return, the purchase must be made before December 31. Before making any decision regarding tax matters, consult your tax advisor for information relevant to your tax situation or position.
Jeff Zbar, The Chief Home Officer
www.chiefhomeofficer.com
Copyright 2008. All Rights Reserved.
