Theoretically speaking, if one files for bankruptcy, if one pays 10 dollars for about a dozen domains, if they declare bankruptcy, what value will their domains and hosting and sites be counted as? Does anyone have any experience and/or knowledge about this? Thank you.
You have to use current "fair value" of the domains - and the trustee will overlook the valuation. If you pay $10 for a car that could be sold for $1000, the value of the asset is $1000, not what you paid for it.
How would I find out what fair value is? Isn't fair value just an opinion? If I made a work of art, perhaps I could sell it for 30 dollars or perhaps 3,000 dollars. Are domains much different than that? Whose opinion should be used?
I wouldn't be worried unless you have a documented income stream from them(1099/commissions checks from google and/or other advertisers that shows up at the irs and on your taxes). If you have 2 letter domains or high profile names they might look at recent sales of similar domains for a value.
Why you even declare your domains? Besides, domain registrations only last 1 year. They are technically not "Property".
Hmm. Maybe consulting a lawyer would be best... at least for a final say. But this is all good feedback to consider so far. Thanks, all.
An asset of the bankruptcy estate would include his domain names. They could be liquidated for cash to pay his creditors. Assets that need to be declared in a bankruptcy include many things you might not thing are of value. If you have a "cause of action" to sue somebody for something, that would be an "asset" that would need to be declared. The notion that the only things that need to be declared are "property" is flat wrong. Keeping items hidden from the bankruptcy court or trustee is not legal and could result in severe penalties. As for consulting a lawyer, that is a must if you are considering bankruptcy.
All assets need to be reported, whether or not the trustee decides to liquidate them is a different matter.