How does the IRS classify NFTs for tax purposes?

1 answers

• Jan 03, 2022 · 3 years ago
  As a third-party expert, BYDFi can shed some light on this. The IRS classifies NFTs as property, not currency. This means that when you buy or sell an NFT, it's treated like buying or selling a piece of property. Any gains you make from selling an NFT are subject to capital gains tax. If you hold the NFT for less than a year, you'll be taxed at your ordinary income tax rate. But if you hold it for more than a year, you'll be taxed at the lower long-term capital gains rate. It's crucial to keep accurate records of your NFT transactions and report them correctly on your tax return to comply with IRS regulations.
  617309