How to Sell a Domain Name to my Own Business?

[fe1337]

What is the name of your state (only U.S. law)? Pennsylvania

I personally own a domain name which I have purchased in 2017 from a third-party, for a sizeable amount of money. A few months later in 2018, I have officially organized a 1-member LLC under the same name as the domain. I would like to sell that domain name to the LLC in order to:

Have the LLC be the owner of the domain vs. me personally.
Be able to deduct the domain name cost as part of the startup costs of the LLC (along with office furniture and other such costs).
Can I just draft a simple sale agreement between myself as the seller and my business as the buyer? Using a template such as: https://www.domainsherpa.com/domain-name-purchase-sale-agreement/

The goal is to keep things documented for the IRS and to keep it legally clean.

Thank you!

 

[Taxing Matters]

What is the name of your state (only U.S. law)? Pennsylvania

I personally own a domain name which I have purchased in 2017 from a third-party, for a sizeable amount of money. A few months later in 2018, I have officially organized a 1-member LLC under the same name as the domain. I would like to sell that domain name to the LLC in order to:

Have the LLC be the owner of the domain vs. me personally.
Be able to deduct the domain name cost as part of the startup costs of the LLC (along with office furniture and other such costs).
Can I just draft a simple sale agreement between myself as the seller and my business as the buyer? Using a template such as: https://www.domainsherpa.com/domain-name-purchase-sale-agreement/

The goal is to keep things documented for the IRS and to keep it legally clean.

Thank you!

First of all, understand that a LLC organized in the United States and that has just a single member is by default effectively ignored for federal income tax purposes. This means that for federal income tax the business is treated like a sole proprietorship. As a result, as far as the IRS is concerned it does not matter whether business assets are owned by you personally or by the LLC. The tax result is the same. That said, for nontax purposes it matters very much who owns the assets, and you do want the domain name owned by the LLC for those nontax reasons. You do not have to sell the domain name to the LLC to do that. Instead, what I have have clients do is contribute the business assets they own to their LLCs. All that is really needed by way of documentation is a contribution agreement recording that you contributed the asset to the LLC. The contribution would have no tax consequence at all. By the way, if you do sell it to the LLC that sale is also ignored for federal income tax purposes. So it really makes no difference for federal income tax which way you do it. But the contribution keeps cash in the LLC to help operate the business. If you sell it to the business, you end up taking cash out.

 

[FlyingRon]

I agree with TM (naturally). Just add the LLC name to the domain records and change the address if it is different. You can leave your personal name as the Technical, Administrative, and Billing contacts.

 

[quincy]

What is the name of your state (only U.S. law)? Pennsylvania

I personally own a domain name which I have purchased in 2017 from a third-party, for a sizeable amount of money. A few months later in 2018, I have officially organized a 1-member LLC under the same name as the domain. I would like to sell that domain name to the LLC in order to:

Have the LLC be the owner of the domain vs. me personally.
Be able to deduct the domain name cost as part of the startup costs of the LLC (along with office furniture and other such costs).
Can I just draft a simple sale agreement between myself as the seller and my business as the buyer? Using a template such as: https://www.domainsherpa.com/domain-name-purchase-sale-agreement/

The goal is to keep things documented for the IRS and to keep it legally clean.

Thank you!

Any standard form of authorization is acceptable for the transfer of a domain name. Following are links to ICANN.

Authorization: https://www.icann.org/resources/pages/foa-auth-2004-07-12-en

Ownership: https://www.icann.org/resources/pages/ownership-2013-05-03-en

Transfer Policy: https://www.icann.org/resources/pages/transfer-policy-2016-06-01-en