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While crypto art sales have boomed in the past month, catching the national spotlight with flashy price tags, what many buyers and sellers might not realize is that non-fungible tokens or NFTs can generate a large tax bill.
In March, a crypto art piece by digital artist Mike Winkelmann, also known as Beeple, made history when it sold for nearly $70 million. When told how he would be taxed on the sale, Winkelmann expressed surprise.
“Holy s—, that’s a lot of taxes,” Winkelmann told CNBC.
HAHAHAHAHA — accurate quote. 🤷 https://t.co/hE2rHAJ79e
— beeple (@beeple) March 17, 2021
Winkelmann may be facing a tax bill worth tens of millions of dollars. As an artist, Winkelmann will also have to pay federal and state income taxes on his earnings from the sale, in addition to reporting the cryptocurrency gains on his 2020 tax return.
The Internal Revenue Services sees buying and selling NFTs as a realization of investment gains, and therefore subject to the capital gains tax.
There are multiple ways you can get taxed when buying and selling an NFT. Capital gains taxes apply to NFTs, in much the same way they apply to selling stocks. However, because …read more
Source:: Businessinsider – Tech