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A thread on how taxes work for NFTs 
At a high level, NFT taxes depend on how you interact with them.
There are two ways you can interact with NFTs:
1) You can create and sell NFTs in a marketplace (Creator)
2) You can buy and sell NFTs (Investor)
At a high level, NFT taxes depend on how you interact with them.
There are two ways you can interact with NFTs:
1) You can create and sell NFTs in a marketplace (Creator)
2) You can buy and sell NFTs (Investor)
1/ Creator taxes
Creators get taxed at the time they sell NFTs.
Ex: today, @beeple sold an NFT worth $69M. This will be ordinary income to him and taxed based on his tax bracket.
Creators get taxed at the time they sell NFTs.
Ex: today, @beeple sold an NFT worth $69M. This will be ordinary income to him and taxed based on his tax bracket.
2/ Investor taxes
Investors pay taxes when they buy NFTs using crypto. This is because they are disposing of a coin to buy the NFT.
Say you had 1 ETH purchased at $100. It's worth $1,000 at the time of spending for an NFT. Capital gain = $900
Investors pay taxes when they buy NFTs using crypto. This is because they are disposing of a coin to buy the NFT.
Say you had 1 ETH purchased at $100. It's worth $1,000 at the time of spending for an NFT. Capital gain = $900
3/ Investors also pay taxes when they later sell the NFT into cash or another cryptocurrency.
Say you later sell the above NFT for $3,000. Now, you have a capital gain of $2,000 ($3,000 - $1,000).
Say you later sell the above NFT for $3,000. Now, you have a capital gain of $2,000 ($3,000 - $1,000).
4/ Lastly, if you are a high-income earner, NFT gains may be subject to a 28% long-term tax rate vs. the maximum 20% tax rate on regular crypto coins.
More info https://www.cointracker.io/blog/how-non-fungible-tokens-nfts-are-taxed
More info
https://www.cointracker.io/blog/how-non-fungible-tokens-nfts-are-taxed
