Financial advisors advocate for a diverse portfolio, but few could have foreseen the level of variety that many people would embark on in 2021. Investment in NFTs and cryptocurrencies soared nearly as fast as the price of those digital assets. Now, however, some of those newbie investors are in for a reckoning.
It’s tax time—and the Internal Revenue Service is taking a special interest in non-fungible tokens (along with people who bet on Bitcoin). That means collectors could be in for a bigger tax bill than they’re expecting.
While the IRS hasn’t specifically labeled NFTs as collectibles, the working assumption among tax professionals is that they belong in the same category as art, jewelry, or antiques. So, collectors who sell their NFTs could potentially face a higher tax rate on the digital art, as high as 31.8%.
What’s worse? Investors will likely incur taxes on both ends of an NFT deal.
The vast majority of NFT purchases are made with crypto or fiat. That requires the…
Read More…
Source : fastcompany.com
Source link
