May 18, 2022

US-based crypto users likely still have to pay taxes on NFTs, says CNBC

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Tax season is almost upon crypto users based in the United States, and even if they plan on keeping their assets digital, nonfungible token — or NFT — buyers might not get off scot-free.

According to a CNBC report today, people who use the profits from their crypto holdings to purchase NFTs will likely still have to pay capital gains tax up to 20% when filing their U.S. taxes.

“Collectors who are buying NFTs with their cryptocurrency gains could face large tax bills this year for deals that most probably thought were tax free,” said CNBC’s Robert Frank. “The IRS considers crypto a capital asset, not a currency, and if you exchange crypto for any other asset, you immediately recognize a capital gain or loss.”

Frank claimed that “Most platforms that sell NFTs are not reporting to the IRS” despite many of the popular auction houses having offices or locations in the United States.

For example, the Winklevoss twins’ NFT marketplace Nifty Gateway is based in San Francisco, but buyers can come from all over the world. Anyone who purchases an NFT from the platform — whether a digital sports collectible or a piece of high-end artwork — is subject to declaring theTitle: US-based crypto users likely still have to pay taxes on NFTs, says CNBC
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Published Date: Wed, 17 Mar 2021 17:15:00 +0000