Yes, it's a capital asset. Only the initial application fees are
capitalized. The annual renewals are operating expenses and not
capital. The coloaction fees are also operating expenses and not
capital.

I received an offer to sell one of my domain names that I have owned
since, I think, 2001. (not algebra.com for those interested).

I would like to treat the sale as capital gain -- gain on sale --
rather than revenue. I believe that this would tax the sale at a
better LT capital gains rate.

Would you think that such a sale qualifies as a long term capital
gain. If so, just what constitutes the cost basis. I would think that
my payments to the registrar are included into cost basis. What else
might be included? How about prorated colocation fees?

Thanks

i