Are there any pitfalls in NFT taxation according to the current U.S. laws?Seems like we now all have stories starting with, “What I did during the pandemic…” Most begin with cleaning out the closet and, hey, guess what? That’s where my story starts, but I bet you can’t guess where it ends!
If the buyer is in the business of buying and selling NFTs, then they may have expenses associated with the activity, such as home office expenses, travel, advertising, fees to list the product on an internet site, salaries to employees, commissions, etc.
Consider the IRS crackdown last year in which it sent letters to 10,000 crypto investors. According to the IRS, these were “educational” letters about the need to report taxable crypto transactions on a tax return. You can be sure, therefore, that the Beeple transaction has put NFTs on the IRS’s radar.