NFT Taxation – An Introduction to the Federal Income Tax Implications of Creating or Investing in NFTs

Despite Non-fungible Tokens (NFTs) growing popularity, the Internal Revenue Service (IRS) has not yet published specific federal income tax guidance prescribing how NFT transactions should be taxed. Nevertheless, NFT transactions, like cryptocurrency transactions, are generally considered to be subject to federal (and often state) income taxation. This article is limited to federal income taxation. The next article in this series will address the state and local tax implications of NFT transactions.

Investors should expect that the sale of an NFT should be treated as the sale of a capital asset, and some NFTs could meet the definition of “collectibles.” When collectibles are sold or exchanged,

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