Correct, presumably the domain name is a capital asset that preserves its basis, so the real cost is the opportunity cost of not spending the money elsewhere. We don't really know this cost.
the domain name doesn't have an inherent value or basis, it's (presumably) unlikely that the next Cover Inc would be willing the same amount within a short timeframe of them wanting to disinvest from the name. Illiquid assets have to pay for liquidity in such cases.