Sales and trading in nonfungible tokens (or NFTs) have gone from increasing to skyrocketing. They’re new. Their values can be volatile. But for those with U.S. tax obligations they can also be a goldmine for the IRS.
come with steep tax consequences.They’re new. Their values can be volatile. But for those with U.S. tax obligations they can also be a goldmine for the IRS. Why? Because unlike most other forms of income and assets, NFTs can create multiple taxation events for both those who are creating them and those who are trading them. In a recent interview for
Shaun Hunley, a Georgia-based tax attorney and tax consultant for Thomson Reuters, stressed the importance of understanding all of the different ways creating and/or trading in NFTs can result in federal income tax.NFTs are considered “self-created intangibles” like many other performances or works of art. What this means is that the creator has no “basis” in what is being sold other than possibly the expenses related to creating it.
Although actual guidance from the IRS is woefully lacking, general tax principles indicate that NFTs are likely to be considered their creator’s inventory by the IRS. Whether someone is in the business of creating NFTs or is an artist or celebrity who is simply adding NFTs to their income stream, the sale of an NFT is not only going to be taxed as ordinary income it is also going to be subject to self-employment taxes. And the tax fun doesn’t end there.
Consider a taxpayer who used ethereum purchased for $10,000 to buy an NFT valued at $100,000. The taxpayer has a $90,000 gain on the conversion of the ethereum. Depending on the holding period for the ethereum the taxpayer is either going to pay ordinary income tax or capital gains tax on that $90,000. Five years later the NFT is worth $500,000. The taxpayer decides to sell it.
Brasil Últimas Notícias, Brasil Manchetes
Similar News:Você também pode ler notícias semelhantes a esta que coletamos de outras fontes de notícias.
NFTs: Why The Next Big Thing In The Digital Economy Is A Cash Cow For The IRSSales and trading in nonfungible tokens (or NFTs) have gone from increasing to skyrocketing. They’re new. Their values can be volatile. But for those with U.S. tax obligations they can also be a goldmine for the IRS.
Consulte Mais informação »
NFTs: Why The Next Big Thing In The Digital Economy Is A Cash Cow For The IRSSales and trading in nonfungible tokens (or NFTs) have gone from increasing to skyrocketing. They’re new. Their values can be volatile. But for those with U.S. tax obligations they can also be a goldmine for the IRS.
Consulte Mais informação »
Sports merchandise company Fanatics now valued at $18 billion with new investors including hip-hop mogul Jay ZSports merchandise company Fanatics is expanding into media, gaming, NFTs and other digital sports verticals. CEO Michael Rubin joins SquawkCNBC to discuss.
Consulte Mais informação »
Voice Technology Is the Next Big Thing in Media and EntertainmentBy 2023, voice commerce is predicted to hit $80 billion, with its uses advancing rapidly as it becomes the desired entryway for consuming video content
Consulte Mais informação »
Big Thief Debut Two New Songs 'Little Things' and 'Sparrow'Big Thief have premiered two new songs, 'Little Things” and “Sparrow.”
Consulte Mais informação »
AMC is hoping sales at the box office reach $5.2 billion, here's why that's a big askAMC needs the box office to reach $5.2 billion to be cash flow positive, analysts say it won't happen.
Consulte Mais informação »