Question
I recently sold a website (which I ran for 3+ years) for a large sum and am looking to minimize my capital gains tax on the sale price.
My normal costs (outsourcers/software...etc) were all written off as expenses throughout the time that I ran the site.
From what I understand I can't include these as part of my basis since they were already written off as regular expenses throughout the years.
I'm trying to understand if I can use my time spent building & promoting the site into my cost basis? I spent a significant amount of my time.
I did pay myself from the business checking to my personal checking on a regular basis for normal living costs but this was a sole proprietorship, so not sure if that would be recognized as a proper 'salary expense'.
I understand this falls under 'sweat equity' but wondering in what circumstances the owner's time could become part of the basis.
I would also be looking for a possible consulting call to touch on additional questions.
Thank you!
Answer
Your time spent on the business is not deductible and does not add to your basis.
