[Blockchain Today Reporter Jieun Lee] The tax season is approaching for US cryptocurrency users. Even if the asset is maintained as a non-replaceable token (NFT), it has been confirmed that users are not free from tax. Cointelegraph reported this.
According to reports, CNBC said that even if NFTs were purchased with profits from holding cryptocurrencies, they would still have to pay capital gains tax of up to 20% when filing taxes.
CNBC’s Robert Frank said, “The majority of collectors buying NFTs with cryptocurrency will think it is tax-free, but there is a possibility of receiving huge tax bills this year.” And if you exchange cryptocurrency for any other asset, it is immediately recognized as a capital gain or loss.”
“Although many of the famous auction houses have offices or branches in the United States, most of the platforms selling NFTs do not report to the IRS,” Frank stressed.
For example, the Winklevoss brothers’ NFT mayor Nifty Gateway is headquartered in San Francisco, but buyers come from all over the world. Whether it’s digital sports collectibles or premium art, all users who purchase NFTs on the platform must declare their assets in accordance with the laws of their country of residence.
One NFT digital artist at Christie’s auction and known as’Beeple’ Mike Winkelmann’s last week’s auction price was more than $699 million. If Americans had used Ethereum (ETH) for their transactions, the tax would probably have amounted to millions of dollars. The buyer, known only as’MetaKovan’, is based in Singapore, which has no capital gains tax.
The IRS has announced new regulations for taxpayers in response to the surge in the digital asset market over the past few years. The regulation requires cryptocurrency users to report any financial interests they receive, sell, transmit, exchange or acquire virtual currency. In most cases, those who hold digital assets such as Bitcoin (BTC) or ETH do not tax any profits unless they are exchanged for other tokens or fiat currencies.
The 2020 U.S. tax filing period is until April 15th.
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