notice has been issued by the Treasury Department and the IRS regarding the taxation of Non-Fungible Tokens (NFTs) as collectibles. The notice is requesting feedback on whether NFTs should be taxed under Section 408(m) of the Internal Revenue Code. The IRS is accepting comments on this matter until June 19th.
The IRS is considering implementing a "look-through analysis" to determine whether a specific NFT should be classified as a collectible for tax purposes. To be considered a collectible, the NFT must meet the definition outlined in the tax code.
According to Shehan Chandrasekera, who is the head of the tax strategy at CoinTracker and spoke to BeInCrypto, the recent notice has shed light on a topic that lacked any clear guidance in the past. Although the guidance is not definitive, the analysis provided has aided in clarifying the taxation of NFTs.
He holds the belief that this might not be advantageous for individuals involved in trading NFTs that are categorized as collectibles. According to Shehan, if an NFT is taxed as a collectible, it could attract a higher long-term capital gain tax rate (28%) compared to the regular 20% rate that non-collectible assets are subject to.
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Source:
https://beincrypto.com/irs-considers-taxing-nfts-collectibles/
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