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Say I bought a domain last summer for $9.99 and sold it later for $50,000, how would that be taxed? Capital Gains? Or something else? Eg, how much of the proceeds should I set aside for Federal, State, and Local taxes at year end?

Anyone here sold domains at a profit and had to figure out taxes for them? Strangely, very little info on this subject on the net.

PS - Not sure if this is the best site for this question, but I see a few other questions here on the subject of selling and valuing domain names.

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This does not pertain to startups. Please take a look at stackexchange.com/sites and consider posting this question on one of the other sites. – bneely Jan 19 '12 at 3:56
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Find an accountant in your locality and ask them. – dnbrv Jan 19 '12 at 5:24
@bneely - sorry I wasn't more clear in my PS, but I did that already, and there are none. Closest is Professional Webmasters, but there are 0 search results for domain name sales tax. There are at least a few unclosed discussions of the topic here, hence why I asked here. The answer could be of peripheral value to startups looking to buy an already-registered domain, or looking to monetize a portion of their domain portfolios to increase their runway. – Kurtosis Jan 20 '12 at 22:05

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The short answer is that this is probably a capital gain. The exception would be if you regulary engaged in the business of buying and selling domain names.

As to paying taxes, you can be assured that virtually every time you make money there will be taxes involved. The amount will depend on a lot of things outside the scope of this question such as your other income and expenses.

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