- If NFTs are interpreted as collectibles, this introduces another tax for both buyers and sellers
NFT sales transactions in the US are subject to ordinary income tax
However, Biden’s new amendments may come as an unpleasant surprise
Americans who did not report NFT income on their tax returns are at risk of heavy fines. San Francisco tax lawyer James Creech told Bloomberg about this.
The new Biden law20214020
The President of the United States signed new amendments on the taxation of cryptocurrencies. They are described in notifications 2014-, 2014-IRB938, Rev . Rul 1536-, 2019-24 IRB1004 and ILM 20666. However, the document does not directly clarify how taxes are paid on NFTs.
One of the amendments may require authors to include income from the sale of NFTs and license fees. Also, the tax authorities are waiting for payments from buyers using NFT for commercial purposes.
Foreign collectors will have to pay taxes twice – to the US treasury and in the jurisdiction of their country. And NFT copyright holders will have to pay taxes on license fees on these tokens.
20214020What is the result
As a result, taxes will be paid not only by the sellers who have received direct benefit from the sale of NFTs, but also by the buyers-collectors themselves. At the same time, the rates are very high: income tax 24%, on also rate 10% of the remaining amount, if the inspector considers such a transaction as income from collectibles .
By the way, according to Google Trends, NFTs overtook cryptocurrencies in popularity in December.