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I started this series here (part I). Why understanding the market value of your domain is important? I believe it is all about creating opportunities. Let’s explore further shall we?
1. Charitable donations
Via About.com:
Donations to charity are tax deductible expenses. These donations can reduce your taxable income and lower your tax bill. Not everyone will be able to deduct their charitable contributions, however. You will need to itemize your tax deductions in order to claim any charity.
“You may deduct charitable contributions of money or property made to qualified organizations if you itemize your deductions.” (IRS Publication 78)
The better you can relate the value of a domain when needed, the easier it is to claim a charitable donation.
2. Taxes
Via The Domain Tax Guide:
How do I report capital gains & losses?
If the value of your property changes.. you get the picture. If you can show it in a cut and dry manner you make the job that much easier.
3. Insurance
Self explanatory here. If you want to insure your assets, understanding their value is essential.
4. Inheritance
Understanding the value of your assets will give you a better picture what you are leaving behind to your loved ones, and possibly, how to split it between those.
5. Joint ventures
If partners bring in assets, quantifying them with dollar amounts ahead is the smartest way to go about it.
6. Funding/Equity
Raising money, giving equity. For you and for your potential investor, you must know and relate what you have before discussions get meaningful
7. Loans
Getting a loan on a domain? Whoever loans you the money must understand the value of what you have. The more accurate you can relate it, the better and faster the process will be.
8. Trades
No two domains are alike, some are worth slightly more than others, some are much more than others. You can conduct a fair trade between domains even if they don’t match value. First, convert the domains in question into dollar amounts. Than, once agreed by both parties, trade may occur and one may end up paying the other some in order to make up the difference. In such a trade scenario, accurate pricing is a must.
Would love to hear your thoughts on the above and other reasons you may have in mind.
Have a great day!
Sahar
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“1. Charitable donations”
I doubt I’d ever just donate a domain unless an organization I liked approached me with a dollar amount first that I did like and they were planning to use it. And the tax consequences made sense.
Or I had an offer in hand that was acceptable and I knew I needed a deduction. I’d then give the domain for to an organization I liked stipulating they would then have a ready buyer for it and thus it was worth the offered value.
“2. Taxes”
On a long term capital gain you need to have held the domain for more than a year. I’d wait until I sold it before taking the gain. Your cost basis is the purchase price, and other costs of acquisition and the costs of ownership.
There might be a time though to take a long term loss. I’d want all my ducks in a row before I attempted that one.
“3. Insurance”
Physical assets need to be insured. You probably have a low chance of a casualty loss with a domain but there is the chance you might lose a domain thru UDRP or hijacking.
I’m not sure but LLoyds of London might be your only choice here. Possibly via a intermediary. There’s a market for someone to explore here.
Did you know there are insurers who specialize in covering crop failures and others who will sell rain insurance for outdoor public performance events? They might be interested in insuring the value of a domain according to the cost of acquisition or some reliable appraisal. It wouldn’t be cheap. And the contract might be a real nightmare.
“4. Inheritance”
I’d think the inheritance should probably be at cost basis. That’s my understanding of how real estate, art and other valuables are done. Keeps the taxes down and hopefully the heirs don’t take a huge hit when they (if they ever) sell.
“5. Joint ventures”
Joint ventures - the partners would decide the value of any assets including domains. An appraisal might be needed if the partners don’t completely agree.
“6. Funding/Equity”
My only thought here is…… a poker face and lots of confidence might help during the negotiations.
“7. Loans”
See my thoughts on number 6 above.
“8. Trades”
The trade won’t happen until both parties agree. At least to conclude the trade. Sometimes expediency is worth a lot of cash though one party or the other might complain later.
A sale is just a trade really. You just take dollars instead of other domains, other assets, bushels of corn, a used anvil, etc. Often a trade needs some cash to sweeten the deal.