Because it has now become common to spend five or six figures to acquire a valuable domain name, certain tax issues have reared their head. Unfortunately, these tax questions are not always so easily answered. For example questions arise as to whether income generated from a domain name should be treated as capital gains or ordinary income? Likewise, if, and how, does one amortize the expense of acquiring a domain name? And does a domain name depreciate in value over time?

Those who invest in, and generate income from domain names, should contact qualified tax professionals with experience in Internet law, to assess their tax consequences.