The IRS is calling for public input on taxing NFTs as collectibles, potentially subjecting them to a maximum capital gains tax rate of 28%.
The United States Internal Revenue Service said it plans to release guidance on having nonfungible tokens, or NFTs, treated as collectibles under the U.S. tax code.for feedback from the U.S. public on how NFTs could be taxed as collectibles. According to the government body, collectibles under U.S. tax law “do not have as advantageous capital-gains tax treatment as other capital assets,” seemingly referring to how crypto assets are currently taxed in the country.
“Until additional guidance is issued, the IRS intends to determine when an NFT is treated as a collectible by using a ‘look-through analysis,’” said the notice. “Under the look-through analysis, an NFT is treated as a collectible if the NFT’s associated right or asset falls under the definition of collectible in the tax code.”
Under the U.S. tax code, selling collectibles such as coins or artwork is subject to a maximum capital gains tax rate of 28%. The proposed IRS guidance could apply the same standard to an NFT certifying ownership of a coin, piece of art or similar collectible.
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