Federal Tax, Tax

Taxing Cryptocurrency & NFTs

Cryptocurrency and nonfungible tokens (NFTs) are far from interchangeable from a tax perspective. A lack of IRS guidance has left tax experts to speculate on the nuances of how various digital assets may be treated. NFTs are cryptographic tokens that exist on a blockchain. They can represent real world items, such as real estate or artwork. NFTs haven’t been formally defined by the IRS. Some cryptocurrencies, like Bitcoin, are considered convertible if there’s an equivalence to a real currency’s value. Because NFTs feature unique identification codes, they can’t be traded or exchanged at equivalency. Contact us with questions regarding the tax reporting requirements of cryptocurrencies. © 2022