Domain Tax Strategy

In brief, the ability to own an Internet Domain name for the purpose of ultimately donating it to the correct charitable organization, depends on how high a profile that 501 c 3 organization is, which would include strong Board of Trustees, donations well over 1 million a year, a long history of honesty not  litigation prone, and in business well over 15 years. 

I registered that type of domain name, some, as far back as 20 years ago, when none of the 501 c 3 organizations even thought registering their own name for the purpose of increasing revenue to their charity. Not at all different from buying a stock that you felt would appreciate. In this case, I was sure it would, if properly used.  As simple as the process is, the back channel to accomplish it, is not simple at all. 

E.g. I owned BrooklynCollege.com, LongIslandUniversity.com, UnitedStatesPresidents.com,UnitedStatesGovernors.com, NewYorkHumaneSociety.org, and many more,  many since 1999, along with dozens of others, varying dates of acquisition. I sold some of those domain names to clients that would be able to use those domain names, to be donated to those charities. some for this year,  and for the next 5 years to come. Most of the domain names that are to be donated to their respective 501’ s already have donations in the multiple millions. It is important to note that, in addition to having aged the domain names for that many years. Charities with low donations in the hundreds of thousands, are of far too little value for the purpose intended. When the domain is donated to the respective charity, expectations of increased revenues is able to be appraised, and for the charity, it is ongoing ad infinitum. One of the other benefits the charity receives, is that their domain name can not be used for financial gain by those interested in acquiring that kind of domain name.

Allowable use of the 30% charitable deduction over a total of 6 years or less. ** Tax code 170(b)(1)(c)ii 

 E.g. an AGI  of $250k would allow for $75,000 deduction annually Fed, and State Tax, in the State you file in. If you had an appraisal value e.g of $400,000, you would be able to carry over $325,000. For the 5 years and so on.

Appraisers credentials are of utmost importance, as the internet has literally hundreds of appraisers that the IRS will never accept, in spite of websites saying they will. 

Owning the domain name of a 501 c 3 eliminates the comparable approach for appraising, as there cannot be a comparable value  for an exact domain name as it stands alone.

The domain name is sold on a time sale contract over a 6 year period, allowable by the IRS.

**I.R.C. § 170(b)(1)(C)(ii) — If charitable contributions described in subparagraph (A) of capital gain property to which clause (i) applies exceeds 30 percent of the taxpayer's contribution base for any taxable year, such excess shall be treated, in a manner consistent with the rules of subsection (d)(1), as a charitable contribution of capital gain property to which clause (i) applies in each of the 5 succeeding taxable years in order of time.

Please contact me Russell Karaviotis, Sr. at russell@Zykar.com

Or do leave me a message on 808 344 0600.