Question: I have a self-employed business client that purchased a motorcycle for business use (to save gas). When inputting the asset into my software, I do not see an asset type for this. What asset type do I choose? I am going through the form instructions on IRS.gov, however, as we know there are nuances and specifications that I may not be aware of. Please help!

Christy's Answer:  The MACRS asset class for a motorcycle is the same as any other vehicle: 5 years.  There are some nuances, however. First, your professional software may not actually list "motorcycle" as a vehicle choice. But, it doesn't matter what the software says. Take, for example, a golf cart (that is used as a business vehicle on a golf course) or an ATV that is used on a farm. These are all specialty vehicles that can be business-use, depending on the taxpayer's scenario. Your software may not list any specialty vehicle like that, but a motorcycle still a vehicle with a 5-year depreciation class life. Some caveats: Motorcycles are considered "listed property". This means the taxpayer can only claim Section 179 depreciation if the asset is used at least 50 percent of the time for business. Taxpayers also have to keep records of the motorcycle's use. Motorcycles also cannot use the standard mileage rate. This requires the taxpayer to keep track of what they actually spend during the year for gas, repairs, maintenance, insurance, license and registration fees, and other expenses, such as mandatory safety gear (like a helmet). This is true of all similar vehicles, as well, such as: mopeds, scooters, or bicycles. These vehicles must use actual expenses or actual costs.

Question: One of my tax clients is planning to sell a website that he built. His business is an SMLLC. He does not regularly sell websites, but this is something that he plans to do this year. What are the tax implications of selling a website? Is there any IRS guidance on a gain computation in this case?

Christy's Answer: A domain or website is generally treated as a capital asset for tax purposes (generally, a Section 197 intangible). Therefore, the sale is given LTCG treatment if the taxpayer has owned it for more than a year. This is unless he's in the actual business of selling websites (a reseller). 

The IRS guidance is spotty in this area because the sale of intangible assets is complex and and digital asset sales are fairly new (with respect to tax law), so this is an emerging area of tax law.

The sale of a website can include a number of different assets:

• The sale of the domain (the web address, which is always treated as a capital asset unless the business is truly a reseller),
• As well as other copyrighted materials and digital assets that already exist on the website (logos, web design, proprietary software, etc.).

Most of the guidance out there is secondary, but this article does a good job explaining the basics of how the asset is treated. It also includes a link to a recent IRS CCA on the subject. IRS CCA 201543014 specifically discusses the treatment of costs associated with the acquisition of a domain, but the whole CCA is an enlightening read on the tax treatment of digital assets in general.

Now, for the specific scenario that you have described, a disregarded SMLLC is just treated as a self-employed person, so the sale of the taxpayer's website or domain would generally go on Schedule D, (although, once again, if the taxpayer is actually in the business of selling websites on a regular basis, the website could potentially be treated as inventory, but that would be rare).

There are five free CPE courses coming up in October from the IRS Stakeholder's office. Register now and get up to 8 hours of free Federal Tax CPE. 

Relief Procedures for Certain Former Citizens  Rescheduled

Date: October 10, 2019

Time: 10 a.m. (ET), 9 a.m. (CT), 8 a.m. (MT), 7 a.m. (PT)

This webinar will cover the following:

• Provide background on United States citizenship by birth and relinquishing citizenship
• Discuss tax implications of relinquishing citizenship
• Describe the purpose and scope of the new Relief Procedures for Certain Former Citizens (“relief procedures”)
• Explain specific filing requirements under the relief procedures and discuss common issues taxpayers may encounter
• Discuss how submissions under relief procedures will be handled by the Service
• Plus a live Q & A Closed captioning will be offered.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 2 CE Credits - Category: Federal Tax. Registration:

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison

An Overview of the Foreign Tax Credit

Date: October 17, 2019

Time: 2 p.m. (ET), 1 p.m. (CT), 12 p.m. (MT), 11 a.m. (PT), 8 a.m. (Hawaii)

This webinar will cover the following:

• Explain the impact of residency status on U.S. taxation.
• Differentiate residency status under U.S. immigration law versus U.S. tax law.
• Determine an individual's residency status for U.S. tax purposes.
• Describe the special tax rules that apply to dual-status aliens.
• Plus a live Q & A Closed captioning will be offered.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 2 CE Credits - Category: Federal Tax.

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison

Tax Obligations of U.S. Individuals Living and Working Abroad

Date: October 17, 2019

Time: 11 a.m. (ET), 10 a.m. (CT), 9 a.m. (MT), 8 a.m. (PT), 7 a.m. (Alaska), 6 a.m. (Hawaii)

This webinar will cover the following:

• Specify the U.S. income tax obligations of U.S. citizens and resident aliens abroad.
• List the requirements for claiming the foreign earned income exclusion.
• Summarize the U.S. employment tax obligations of U.S. citizens and resident aliens abroad.
• Plus a live Q & A Closed captioning will be offered.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 2 CE Credits - Category: Federal Tax.

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison

Understanding the 2020 Form W-4 and How to Use it 

Date: October 22, 2019

Time: 2 p.m. (ET), 1 p.m. (CT), 12 p.m. (MT), 11 a.m. (PT), 8 a.m. (Hawaii)

This webinar will cover the following:

• Explain the reason for a new design of the W-4
• Explain Steps 1-5 of the 2020 Form W-4 Explain who must use the 2020 Form W-4
• Illustrate how to complete two of the five worksheets from Publication 15-T
• Plus a live Q & A Closed captioning will be offered.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 1 CE Credit - Category: Federal Tax.

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison

Tax Security 2.0 - A “Taxes - Security - Together” Checklist

Date: October 24, 2019

Time: 2 p.m. (ET), 1 p.m. (CT), 12 p.m. (MT), 11 a.m. (PT), 8 a.m. (Hawaii)

This webinar will cover the following:

• Deploy the “Security Six” basic protections
• Create a written data security plan
• Educate yourself on phishing scams
• Recognize the signs of client data theft
• Create a data theft recovery plan
• Plus a live Q & A.

Continuing Education: All participants who qualify will receive a Certificate of Completion. Tax Professionals earn up to 1 CE Credit - Category: Federal Tax. Registration:

Please visit the registration website.

Sponsored By: IRS Stakeholder Liaison

IRS Relief Procedures for Certain Former Citizens

Thursday, October 10, 2019

10:00 a.m. Eastern, 9:00 a.m. Central, 8:00 a.m. Mountain (MDT), 7:00 a.m. Pacific

This free 100-minute webinar is open to ALL

This webinar will cover the following:

• Provide background on United States citizenship by birth and relinquishing citizenship
• Discuss tax implications of relinquishing citizenship
• Describe the purpose and scope of the new Relief Procedures for Certain Former Citizens (“relief procedures”)
• Explain specific filing requirements under the relief procedures and discuss common issues taxpayers may encounter
• Discuss how submissions under relief procedures will be handled by the Service Plus a live Q & A

Tax Professionals – Earn 2 CE Credit – Category: Federal Tax