NFT sales trigger taxable events for both creators and collectors Purchasing NFTs with crypto creates taxable disposition of that cryptocurrency Potential 28% collectibles tax rate risk for NFTs held over one year Recurring revenue streams from royalties subject to ordinary income tax

Keep detailed records of all crypto transactions including dates and values Consult tax professionals due to complex and evolving regulatory landscape Plan ahead for substantial tax burdens especially with NFT transactions Consider tax implications before making crypto trades or exchanges

Curated by: Rubric Advisors

Tax Planning

Crypto Taxes

This article explains how cryptocurrency transactions are taxed as property by the IRS, covering income treatment, record-keeping requirements, and specific considerations for NFTs and DeFi assets.

Crypto Taxes

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Crypto Tax Fundamentals

Cryptocurrency is treated as property by the IRS for tax purposes
Every spend, trade, or exchange creates a taxable event requiring reporting
Tax liability depends on market value, cost basis, and gain/loss calculation
Capital gains rates apply based on holding period of the asset

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Crypto Tax Fundamentals

Cryptocurrency is treated as property by the IRS for tax purposes
Every spend, trade, or exchange creates a taxable event requiring reporting
Tax liability depends on market value, cost basis, and gain/loss calculation
Capital gains rates apply based on holding period of the asset

Crypto Income Taxation

Cryptocurrency received as wages is treated as ordinary income subject to taxes
Mining crypto counts as ordinary income at fair market value when received
Self-employment tax applies to consulting income received in cryptocurrency
Business expenses for mining equipment and gas fees may be deductible

Record Keeping Requirements

IRS prefers Specific ID method for identifying disposed crypto units
Must track acquisition dates, basis, and fair market values for each unit
Document sale dates, disposal values, and amounts received for each transaction
Defaults to FIFO method if specific units are not properly identified

NFT Tax Treatment

NFT sales trigger taxable events for both creators and collectors
Purchasing NFTs with crypto creates taxable disposition of that cryptocurrency
Potential 28% collectibles tax rate risk for NFTs held over one year
Recurring revenue streams from royalties subject to ordinary income tax

Key Takeaways

Keep detailed records of all crypto transactions including dates and values
Consult tax professionals due to complex and evolving regulatory landscape
Plan ahead for substantial tax burdens especially with NFT transactions
Consider tax implications before making crypto trades or exchanges

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The information above is for educational purposes only and does not constitute investment advice, a recommendation, or a solicitation to buy or sell any security. Any historical figures are for illustration only, and past performance does not guarantee future results. Tax laws, regulations, and contribution limits change frequently, the details here may become outdated. Individual circumstances vary. Consult a qualified financial advisor, CPA, or attorney for guidance specific to your situation. Rubric Advisors is registered with the California DFPI; registration does not imply a certain level of skill or training.

Crypto Taxes

Crypto Tax Fundamentals

Crypto Income Taxation

Record Keeping Requirements

NFT Tax Treatment

Key Takeaways

Crypto Tax Fundamentals

Crypto Income Taxation

Record Keeping Requirements

NFT Tax Treatment

Key Takeaways

Related Topics

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Crypto Taxes

Crypto Tax Fundamentals

Crypto Income Taxation

Record Keeping Requirements

NFT Tax Treatment

Key Takeaways

Crypto Tax Fundamentals

Crypto Income Taxation

Record Keeping Requirements

NFT Tax Treatment

Key Takeaways

Related Topics

Crypto Tax Planning Playbook

Gifting Appreciated Stock: A Tax-Smart Way to Give

Ordinary Income vs Capital Gains