In the absence of specific rules, some tax advisors take the position that domain names are subject to the same tax rules as trademarks. This will sometimes be the case, but not always. In some cases, a domain name is the functional equivalent of a trademark, and should be treated as such. However, domain names also have unique characteristics that defy easy comparisons with trademarks. For this reason, the government needs to rewrite the rules to take into account domain names.
Taxation concerns itself with value.
If we cannot assign a value to an asset, that asset does not exist. This article focuses on the source of value of domain names, and uses the source of value to define their character and tax treatment. To the extent a domain name s value comes from its association with a product, service, or business, it should be treated as a trademark for tax purposes. To the extent the domain name has inherent value that is, to the extent a domain name s value does not have its source in association with a business it should not be treated as a trademark. A domain name should be treated as a unique asset, not defined in the tax code, to the extent of its inherent value.