On April 1, 2022, Michele Weiss will moderate a Beverly Hills Bar Association program on “Tax Implications of Acquiring, Holding or Selling NFTs“.
The recent explosion of the creation and sale of NFTs has brought about significant concerns regarding the taxation of these transactions for sellers, purchasers, and investors. Tax counsel and accountants for clients holding and selling NFTs must understand applicable tax rules, reporting requirements for these transactions, and the tax treatment of NFTs.
An NFT is a digital certificate of certain rights associated with a digital or physical asset. Thus far, NFTs have been created and sold for various assets within the art, music, and sports industries worldwide. However, since NFTs and NFT transactions are fairly new, the IRS has yet to issue guidance directly addressing NFTs. This forces taxpayers to rely on general tax law principles and current IRS guidance on digital assets and virtual currency.
NFTs are typically acquired in exchange for virtual currency and, as such, are treated as property resulting in recognition of gain or loss on the taxpayer. However, the characterization of an NFT and related transactions can depend on how the transactions are facilitated. If an NFT is treated as a collectible versus a digital asset, it can result in different tax treatment (i.e., a primary transfer may be considered a license, while a secondary market transfer is considered a sale).
Tax counsel and advisers must recognize applicable tax rules for NFTs, differences to cryptocurrencies, and define proper reporting and tax treatment for NFT transactions.
Listen as our panel discusses critical tax considerations for NFT transactions, tax issues for creators and investors, and other key issues for NFTs.
BHBA’s NFT week is sponsored by Variety and includes daily webinars on the myriad issues implicated to a party who acquires, holds, and/or transfers NFTs. The program will be on Friday, April 1, 2022, at 12:30 p.m. via Zoom.
To register, please go to BHBA site. The program is fee for BHBA Members and $35 for Non-Members.