Anabel Pasarow is an assistant editor for CoinDesk's Layer 2.

To date in 2022, the NFT market has seen more than 8.61 million ETH in trading volume across 2.7 million wallets. According to CoinMarketCap, the sector’s total market cap amounts to over $13 billion. And yet, despite the industry’s astronomical size and continued growth, there remains a lack of clarity around NFT taxation for both creators and collectors alike.

For the 2022 tax year, the Internal Revenue Service updated Form 1040 and replaced the term “virtual currency” with “digital assets,” a broader label to encompass both NFTs and cryptocurrencies. The IRS treats digital assets as property, meaning they are subject to capital gains tax rates.

This piece is part of CoinDesk's Tax Week.

While the guidance remains somewhat murky, below are the general NFT-related rules of thumb to consider when filing your 2022 taxes in the U.S. Note that there is not yet any official guidance from the IRS on commissions or royalties received from downstream NFT resales, but they would most likely be considered income.

Disclaimer: This is not tax advice, and we strongly recommend engaging with a tax professional before filing your 2022 tax return.

CoinDesk - Unknown

(CoinDesk)

This article was originally published on Nov 17, 2022 at 6:35 p.m. UTC

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Anabel Pasarow is an assistant editor for CoinDesk's Layer 2.

CoinDesk - Unknown

Anabel Pasarow is an assistant editor for CoinDesk's Layer 2.


Crypto Terms
backgroundCrypto Flashcards & Glossary
View All