NFTs will be taxed in the same manner as the underlying assets until it is determined how to tax digital proofs of ownership held in retirement accounts.
The IRS is currently examining the possibility of subjecting non-fungible tokens (NFTs) to taxation in the same way as other types of collectibles, such as rare stamps, paintings, and fine wines. This could have a significant impact on individuals who have invested in NFTs as part of their retirement savings plan.
This latest move by the US tax authority is aimed at clarifying the taxation of digital assets and filling a void that has left many taxpayers uncertain about their obligations.
The IRS and the Treasury Department are inviting comments and feedback on the proposed guidance, which suggests that NFTs may be subject to less favorable treatment under capital gains tax rules. This could also have implications for retirement accounts that hold NFTs.
The IRS has requested feedback on various issues related to NFTs, including when they qualify as artwork. Until further guidance is issued, the IRS will treat NFTs as the underlying asset, whether that is a piece of art or a precious gemstone.
If you owe taxes, it's important to file your #IRS tax return by the due date and pay as much as you can. Late-filing penalties are calculated based on the amount owed for each month a tax return is late. See https://t.co/tZ7Ni3lhn3 pic.twitter.com/FEnYtsBDiT
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In October, the IRS updated its instructions for tax forms to include NFTs, along with other types of cryptocurrencies. This move is part of a broader trend among governments worldwide to regulate digital assets and prevent their use for illegal activities such as money laundering and terrorism financing.
