18/11/2022 Do You Owe Taxes on Your NFT?

Here are the NFT-related rules of thumb to consider when filing your 2022 taxes.

CDCROP: non fungible tokenabbreviated as NFT in white letters on red dice against the background of dollars. new way to get rich (Getty Images)

To date in 2022, the NFT market has seen more than 8.61 ETH in trading volume across 2.7 million wallets. According to CoinMarketCap, the sector’s total market cap amounts to over $13 billion. And yet, despite the industry’s astronomical size and continued growth, there remains a lack of clarity around NFT taxation for both creators and collectors alike.

For the 2022 tax year, the Internal Revenue Service updated Form 1040 and replaced the term “virtual currency” with “digital assets,” a broader label to encompass both NFTs and cryptocurrencies. The IRS treats digital assets as property, meaning they are subject to capital gains tax rates.

While the guidance remains somewhat murky, below are the general NFT-related rules of thumb to consider when filing your 2022 taxes in the U.S. Note that there is not yet any official guidance from the IRS on commissions orroyalties received from downstream NFT resales, but they would most likely be considered income.

CoinDesk - Unknown

(CoinDesk)

Arts

https://www.coindesk.com/learn/do-you-owe-taxes-on-your-nft/

Interesting NFTs
No Future #9/15
None
Her Mind Had Gone Out For A Stroll & Fallen Down The Rabbit Hole
Her Mind Had Gone Out For A Stroll & Fallen Down The Rabbit Hole' is the first programmable piece of art by Kitty Bast. The owner constructs, modifies & tattoos their very own Doll Lady... Is she falling down a rabbit hole, lost in a sea of cats or gazing into the unknown void? Do you like Pink Ladies or Lilac Ladies? Or do you pick the Wild Card? There's always a wild side to an innocent doll face. Is she obsessed with crypto ponies or crypto kitties? Or does she have an insatiable desire for Mr. Honey Badger. Come inside and have a nice cup of NFTea with the bunnies. Is your lady chained to the blockhain? Does your lady shed Bitcoin tears or ETH tears? Does your doll face don a Rotten Heart? Do you HODL to the Moon to meet the ETH Kitty? Do you have an obsession for cyborgs or Puddin'? Would you like a slice of Death by Pink? Is The Cat's Eye green or golden? Little trolls with mini daggers not included. The cheshire cat might trade you his ears for your goggles. Modifications of the Host. How long is forever? Sometimes, just one second.
Dawnfrost
A character from The Beacon
#81451
By OthersideDeployer
The Harvest
An anthropomorphic figure stands, wide eyed, staring at the viewer; its body masculine, muscular, and humanoid. Its “mind” dissociates into a conglomerate of structures resembling feathers, grain, teeth–as well as a radial flower “node”, casting linear rays throughout the composition. To his left, a vat of bodies gesture and writhe in a kind of amniotic soup, attended by a video game robot. The bot's red display reads “uWu”. Behind the robot and filling the left side of the composition is an archaic figure composed of a variety of vintage objects and symbols. Among them are a hardbound book with ancient cuneiform scripts, indicating barley, beer, bread, ox, house, and sky, behind which is a grimacing, salivating jagged toothed maw; and an old Commodore floppy drive. The figure’s head tilts toward an illuminated crescent moon, suggesting the Egyptian Sacred Bull. The archaic figure is composed of a variety of mutating cells, which shift in color, and pattern; eventually breaking free into an ephemeral broadcast of bubbles which move across the background. The work came into being against a psychological introspection, which included associations to pop culture such as alien abduction and pod people, as well as quite a bit of reflection on grains as a symbol of civilization, agriculture, sustenance, life, and imbibing (mainly whiskies).