Hmm... I need to find out myself. I don't know what is the right answer. I'll do some poking around and get back to you if I bump into an decent answer. You should email the people at 123 reg as they probably could assist you..
The way I understand it is that you are renting the HostGator from the registrar. When you "sell" it, they are really just buying out your lease or your right to rent the domain..
In terms of accounting, there are two methods, the cash basis and accrual. Smaller companies tend to use the cash basis, which means you expense something out when you incur the expense. Larger companies tend to use the accrual basis, which means you expense something out when it sells. This is usually geared more towards physical inventories rather than intangible property that you are renting..
As domagon said, it really doesn't matter which accounting method you use, as long as you stick with it. When you filed your first tax return for the business you had to state which method of accounting you use, so you need to stick with that or notify them of a change if you decide to do it a different way..
I personally use the cash basis and treat the expense as rent...