Looks like the IRS has rolled out new tax rules that put NFTs in the same category as stablecoins and cryptocurrencies. According to their guide for the 2022 tax year, everything labeled as a "digital asset" including stablecoins, NFTs, and crypto is gonna be taxed under the same guidelines.
There's more detail in the official IRS document if anyone wants to check it out.
Hi mate , thanks for posting this
I was gonna do a similar post regarding this with the UK HMRC.
Please let me know if Im going off topic as Ill delete and do a post for the UK members.
Im wondering what the tax implications are with HMRC.?
Makes sense that they are wording it so any current or future crypto-based coin/ntf/token/whatnot will be covered. I'd think the nft folks should be glad they are not taxed as collectibles... capital gains are 28% for them- ouch!
Per that article:
What is an NFT token for no taxation?
You have 100,000 USDT dollars.
You bought your NFT token from another unregistered account for 100,000 and sold it for 10,000. You have a loss of $90,000.
Or vice versa, you can buy your token from another unregistered account and sell it for more if you need a profit for taxes.
https://www.coindesk.com/policy/2022/10/25/uk-lawmakers-vote-to-recognize-crypto-as-regulated-financial-instruments/
UK Lawmakers Vote to Recognize Crypto as Regulated Financial Instruments
"The lower house of the Parliament voted in favor of adding crypto to the scope of activities to be regulated via the proposed Financial Services and Markets Bill which already seeks to extend payments rules to stablecoins."
https://www.coindesk.com/policy/2022/10/24/crypto-friendly-rishi-sunak-to-become-uk-prime-minister-following-truss-exit/
Crypto-Friendly Rishi Sunak to Become UK Prime Minister Following Truss Exit
Perhaps there will be fewer problems with cryptocurrency regulation in the UK?
Well this makes sense as well. NFTs are no different from crypto currencies, it's just that they are not fungible and therefore not that liquid otherwise all the qualities are exactly the same so the tax treatment also is bound to be same. But best part is they are being taxed at 20% rate which is lesser than rate of tax in India which is exorbitant 30% flat without the benefit of any tax slab whatsoever.
NFTs are very different from cryptocurrencies because they are not fungible.
You cannot manipulate the price of bitcoin or ethereum, but you can very easily manipulate the price of your non-fungible NFT. This is a big problem for the tax authorities.
I'm assuming a common situation like you have $100,000 worth of cryptocurrencies and $100,000 worth of NFT tokens. The price of the cryptocurrency in your portfolio has increased by $50,000. To avoid paying tax, you need to sell NFT tokens for $50,000.
https://twitter.com/cobie/status/1590977412732710913
This appears to be the first recorded case of NFT utility in existence 👍
https://twitter.com/cobie/status/1590967191587131394
"Can anybody explain what is happening with this address?
https://etherscan.io/address/0x26C5A34Bc8398fbD395b518ffAb27724D7CC9617#tokentxns
It is withdrawing millions of Tether from FTX and sending them to 0x18df7b342cdd4e7db0def4546c0ed01e79fd207e
Currently $21m withdrawn."
https://twitter.com/cobie/status/1590974648552148992
"Apparently this is a Bahamas account withdrawing other people's funds for them.
They are likely bypassing the internal balance transfers block by selling NFTs on FTX's NFT marketplace -- eg. Bahamas account creates an NFT, the stuck user buys the NFT with their full balance."