The sale of a domain name could be taxable if you had a gain or you might you might have get a tax benefit if you had a loss.If the domain name was used in a business and you deducted or deprecated the cost then you must recapture this deduction on Form 4797. The amount deprecated would be ordinary and any excess would be capital gain.If you bought the domain name and never used it in a business or deducted then the sale would be a capital gain or loss reported on schedule D.