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Title: Taxes on NFT holders Post by: Renampun on March 29, 2023, 08:48:37 PM Quote The U.S. Internal Revenue Service has taken its first formal steps in laying out rules for the taxation of non-fungible tokens (NFTs), potentially exposing them to a maximum long-term capital gains tax rate of 28% if they are considered collectibles rather than the 20% that applies to other digital assets and to securities. The March 21 Notice 2023-27 says that the agency is intending to issue specific rules for NFTs, which can represent collectible assets (Artwork like the BoredApe Yacht club or Crypto Punks series) and non-collectibles (event tickets) and sometimes both. you can read the full article here-- (https://www.forbes.com/sites/shehanchandrasekera/2023/03/29/irs-guidance-could-expose-nfts-to-a-higher-tax-rate-than-other-digital-assets/?sh=7ad9eab8494c)This notice marks the first formal attempt by the IRS on laying out guidelines for NFT taxation. Previously taxpayers have been applying general rules applicable to property for NFT transactions, relying on IRS Notice 2014-21 issued in 2014. This notice also comes as part of a visible if undeclared campaign by the executive branch, federal agencies, and some members of Congress against the digital-assets industry. NFT Tax Treatment Section §408(m)(2) of the U.S. Tax Code defines a collectible as: any work of art any rug or antique any metal or gem any stamp or coin any alcoholic beverage any other tangible personal property specified by the secretary of the Treasury Taxation of an NFT under current IRS practice depends on the asset it represents. The agency calls this “look-through analysis” and encourages filers to use it when determining tax consequences until the new guidance is issued. For example, a gemstone represented by an NFT would be a collectible, but the right to develop a plot of land in the metaverse would not. Collectible Vs. Non-Collectible The status matters for tax rates and reporting requirements. Long-term capital gains generated from NFTs classified as collectibles could be subject to a 28% tax rate, above the 20% of other capital assets. Moreover, collectible-NFT sales should be reported on Form 8949, Column (f) with code “C” to indicate to the IRS that it’s a collectible as opposed to a regular capital asset. after the US government imposed a 30% tax on the mining industry (https://bitcointalk.org/index.php?topic=5444196.0), it seems that the US government will not stop there, they planning to make new tax rules on NFT holders. it seems that this decision will have a big impact on the future of the NFT token category. For those who have NFT category tokens, are you going to sell immediately or are you going to continue to follow the development of new rules on NFTs? Title: Re: Taxes on NFT holders Post by: franky1 on March 29, 2023, 11:39:42 PM imagine it
paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC Title: Re: Taxes on NFT holders Post by: Hispo on March 30, 2023, 01:32:29 AM That was unexpected, quite high considering this is rather a new kind of asset.
On the other hand I find amusing that people at the IRS is willing to tax literally anything that has liquidity. In the early days on Bitcoin, I assume they were laughing at the idea of it becoming an actual currency or being accepted to some extend as a tool to transfer value in a decentralized way. As soon as liquidity, adoption and volume increased, they had stop the laughter and move onto taxing. imagine it paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC How things are going, it should not be a surprise Steam and Epic Games would ask for full KYC in a decade or earlier. But it would make more sense it was related to MMORPG's where people can partake in a secondary market of in-game currency, which gains are (of course) taxable. Title: Re: Taxes on NFT holders Post by: Darker45 on March 30, 2023, 01:40:15 AM Well, in all fairness, this is probably the right thing to do, especially at this point in time when NFTs are apparently used for money laundering. Somebody can make millions of dollars in legitimate transactions selling pixelated images and monkey jpegs. So I guess it's just the IRS doing its job well. This may be perceived as a villain agency but it's just performing its mandate.
But what I'm particularly amazed at is how updated the IRS is on what's happening around. In my country, the Bureau of Internal Revenue is clueless and is still operating on archaic policies. Title: Re: Taxes on NFT holders Post by: Renampun on March 30, 2023, 05:48:36 AM imagine it paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC How things are going, it should not be a surprise Steam and Epic Games would ask for full KYC in a decade or earlier. But it would make more sense it was related to MMORPG's where people can partake in a secondary market of in-game currency, which gains are (of course) taxable. with the possibility of imposing taxes on NFT games that generate money it will have a big impact on players, the development of NFT games that generate money has not been fully accepted by many people, if news like this already appears then I doubt people will be interested in playing NFT games in the future ahead. Well, in all fairness, this is probably the right thing to do, especially at this point in time when NFTs are apparently used for money laundering. Somebody can make millions of dollars in legitimate transactions selling pixelated images and monkey jpegs. So I guess it's just the IRS doing its job well. This may be perceived as a villain agency but it's just performing its mandate. But what I'm particularly amazed at is how updated the IRS is on what's happening around. In my country, the Bureau of Internal Revenue is clueless and is still operating on archaic policies. as a bureau with authority, they are reasonable to make tax regulations on NFTs, especially now that NFTs are already categorized as digital assets, but the rates are quite high, just imagine up to 20% ++ of the value of the NFT assets. Title: Re: Taxes on NFT holders Post by: Wind_FURY on March 30, 2023, 06:24:32 AM OP, will they do tax-cuts for losses from NFT "investing" as well? I believe there will be more tax-cuts than tax-payments.
8) imagine it paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC I could imagine it. There might not truly be a difference in how they could differentiate, and systemize, between an NFT and a CS:GO skin or WOW items. But I believe there would be a push-back from gaming companies, some sane politicians, and users if the government starts proposing KYC for gamers. Plus it cannot simply be done without legislation. Title: Re: Taxes on NFT holders Post by: davis196 on March 30, 2023, 06:33:39 AM imagine it paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC There's a big market for CSGO skins and other in-game items, which can be bought and sold. Actually, some gamers are making money out of selling their skins and games(when the prices do up). They should report their income from gaming. If KYC policies were forced upon Steam(Valve corporation) I think that Steam would simply kick out of their platform all the games, that offer in-game items like skins, boxes, etc.(which can be bought and sold in different online marketplaces). Personally, I don't care about the NFT market at this point. All the hype around NFTs is gone and taxing NFT holders would be another nail in the coffin for the NFT world. It's like kicking a dead horse. ;D Title: Re: Taxes on NFT holders Post by: Lorence.xD on March 30, 2023, 08:27:28 AM As far as I know, it would be impossible for government to put taxes on decentralized market. Here in my country, NFT games were popular especially in the times of pandemic. A lot of investor tried this kind of investment where it reach to the point that it has been acknowledged by the media and news. They interviewed people who profit and asked them questions such as what they did to their money. Some bought houses, motorcycle and build businesses.
Due to its popularity, government take initiative to how people can earn that much without paying taxes. They announced it to the public that taxes will be included when playing NFT games. Of course they can't do that in the end its still decentralized. Maybe in the next decades some games every transactions will include taxes fee. It just need some proper documentation and legalisation. Title: Re: Taxes on NFT holders Post by: KiaKia on March 30, 2023, 09:58:31 AM Biden is the culprit, that's why this man is not coming back as the predisnde of the United States of America soon, he has simply made the US a cruel place for crypto holders and investors, and he wants all the piece of the pie using high Tax rate on everything crypto, this is stupidly insane, this is one reason that I can quit a country for because all my life is built on crypto investment, trading, and mining, USA is not a place for someone like me.
Right now China must have noticed that Bitcoin and crypto could be beneficial for their people I think that's why they now become friendly to crypto adoption, even when their CBDC is in place already, it just show how stupid USA is right now . Title: Re: Taxes on NFT holders Post by: BenCodie on March 30, 2023, 10:06:13 AM Tax the poor. Print for the rich. What a perfectly sound way of running a country! I suppose that they are going broke after all, so one should expect some ridiculous moves in an attempt to keep the machine running...they are only making themselves more prone to uproar and rebellious minds who will create technology and solutions to defy these moves. Let regulators and politicians shoot themselves in the foot, Bitcoin and everyone who believes in it will only be better off for it.
Title: Re: Taxes on NFT holders Post by: o48o on March 30, 2023, 10:54:14 AM imagine it Well if people paid taxes for really expensive game skins before ( i haven't heard that they did), i guess nothing would change on that front. paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC But if not, i am guessing you can opt out from any ski trading activity because online game companies sure as hell aren't going to drive away potential customers that won't be filling kyc or buying and selling skins. They can still buy games and addons even if they are not selling them forward. It's not like every game will have mandatory marketplace. But sure, people who buy and sell skins, either nfts or not, will be most likely be filling mandatory kyc. Title: Re: Taxes on NFT holders Post by: karmamiu on March 30, 2023, 01:02:13 PM Tax the poor. Print for the rich. What a perfectly sound way of running a country! I suppose that they are going broke after all, so one should expect some ridiculous moves in an attempt to keep the machine running...they are only making themselves more prone to uproar and rebellious minds who will create technology and solutions to defy these moves. Let regulators and politicians shoot themselves in the foot, Bitcoin and everyone who believes in it will only be better off for it. It's just absurd how the government tries to dip their feet on almost everything for the sake of their so called "security". Now, everyone can no longer game in peace. Almost everything requires taxes, and you need to report each asset you own. Right, I have a free arcana from the recent welcome package, where should I register this to declare ownership? ahahaha It isn't even tradeable. This new government laws imposing taxes to everything is getting nonsense. That aside, if this really requires KYC, are we on the way to become pro players? we can no longer create new accounts if we cannot verify using KYC? Title: Re: Taxes on NFT holders Post by: S3300 on March 30, 2023, 01:13:13 PM imagine it Only in the US I bet, this is getting out of hands and the current president of the US needs to leave the office for someone better to run, this man is just trying to milk out of every possible thing he can think of, I am hoping that this will only affects all players in the US, I can't do without online gaming, this will suck very bad. paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC Title: Re: Taxes on NFT holders Post by: karmamiu on March 30, 2023, 01:43:37 PM imagine it Only in the US I bet, this is getting out of hands and the current president of the US needs to leave the office for someone better to run, this man is just trying to milk out of every possible thing he can think of, I am hoping that this will only affects all players in the US, I can't do without online gaming, this will suck very bad. paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC Title: Re: Taxes on NFT holders Post by: Yogee on March 30, 2023, 02:05:40 PM This is just a formality. If the IRS have been encouraging taxpayers to file NFT holdings according to its purpose then it's only a matter of time before a specific law is introduced.
As far as I know, it would be impossible for government to put taxes on decentralized market. You really believe NFTs are decentralized? This is like saying Tornado Cash is decentralized until the Government made its move. Keep in mind that anything that generates profit is generally taxable in all places unless there's a specific law that says it's not.Title: Re: Taxes on NFT holders Post by: rossjamie on March 30, 2023, 02:45:40 PM In the end tax people will try to find their way to charge you a tax more. It's an open secret though,
if they don't have any resource to charge the tax maybe they will charge you for breathing or walking Title: Re: Taxes on NFT holders Post by: Gyfts on March 30, 2023, 02:50:43 PM imagine it paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC I'd imagine they would want you to pay taxes if you bought an in-game item and then resold it for a profit regardless of any new NFT classifications. Under these guidelines though, the seller would be subject to nearly a 30% tax presumably. Wonder how many people will inadvertently have dodged taxes not realizing their in-game item sale would be subject to the same tax as any other digital asset? That's assuming they don't make in-game items classified as a collectible. NFT's aren't physical so the Biden administration are just making useless tax provisions because they're desperate for revenue. They need to pay their trillion dollar spending packages somehow. Title: Re: Taxes on NFT holders Post by: woez on March 30, 2023, 04:04:13 PM My opinion regarding Tax regulations are often subject to change, and it is possible that proposed tax regulations on NFTs may not come to fruition or may be revised in some way. I think it's also worth considering the potential long-term value of NFTs, as well as the potential gains or losses from holding them beyond the tax implications.
Regarding the decision to sell or retain NFTs is an individual decision which should be based on a thorough understanding of the situation and a careful assessment of individual financial goals and risk tolerance. Title: Re: Taxes on NFT holders Post by: sana54210 on March 30, 2023, 07:06:39 PM As far as I know, it would be impossible for government to put taxes on decentralized market. You really believe NFTs are decentralized? This is like saying Tornado Cash is decentralized until the Government made its move. Keep in mind that anything that generates profit is generally taxable in all places unless there's a specific law that says it's not.Basically it is as decentralized as you want it to be, and then when you want to cash that out, there are mixers if you want to use it, but then you could always just pay the cash if you profited and not really care about the tax in that situation, after all making x100 means you can pay the tax. Title: Re: Taxes on NFT holders Post by: lionheart78 on March 30, 2023, 07:59:20 PM But what I'm particularly amazed at is how updated the IRS is on what's happening around. In my country, the Bureau of Internal Revenue is clueless and is still operating on archaic policies. Isn't that a good news for us? We can still have a tax-free interaction with NFTs. I hope our BIR will stay clueless and stuck operating on archaic policies. ;D After all, I don't believe that 100% of the tax collected by this bureau goes to the government treasury. Honestly I do not mind the government taxing NFT holders after all tax is taken on the successful trade that brings profit to the holder. It is that 28% is a bit high IMO. As far as I know, it would be impossible for government to put taxes on decentralized market. Here in my country, NFT games were popular especially in the times of pandemic. A lot of investor tried this kind of investment where it reach to the point that it has been acknowledged by the media and news. They interviewed people who profit and asked them questions such as what they did to their money. Some bought houses, motorcycle and build businesses. Due to its popularity, government take initiative to how people can earn that much without paying taxes. They announced it to the public that taxes will be included when playing NFT games. Of course they can't do that in the end its still decentralized. Maybe in the next decades some games every transactions will include taxes fee. It just need some proper documentation and legalisation. They are not taxed because there isn't a law yet that is implemented on the subject matter. They had only announced that NFT will be included and yet there is no bill or regulatory implementation made yet. It is different if the law is already made and the announcement is the implementation itself not just an announcement to include. Title: Re: Taxes on NFT holders Post by: odunybiz on March 30, 2023, 10:25:27 PM so soon you wont be able to play online games without KYC Do you think KYC will be necessary to play online games? I don't see any important in this KYC when it come to online game. Title: Re: Taxes on NFT holders Post by: jossiel on March 30, 2023, 10:33:51 PM imagine it And on that case, Steam is much better and not subject to tough ruling than of those who holds NFTs and cryptocurrencies.paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC so soon you wont be able to play online games without KYC Do you think KYC will be necessary to play online games? I don't see any important in this KYC when it come to online game. Whilst in NFTs, we've known that there have been P2E games that requires NFTs as game characters in able to start the game. Having that said, it's not only the developers are subject to taxation but also the players. Title: Re: Taxes on NFT holders Post by: Hispo on March 31, 2023, 02:24:26 AM imagine it paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC How things are going, it should not be a surprise Steam and Epic Games would ask for full KYC in a decade or earlier. But it would make more sense it was related to MMORPG's where people can partake in a secondary market of in-game currency, which gains are (of course) taxable. with the possibility of imposing taxes on NFT games that generate money it will have a big impact on players, the development of NFT games that generate money has not been fully accepted by many people, if news like this already appears then I doubt people will be interested in playing NFT games in the future ahead. Well, in all fairness, this is probably the right thing to do, especially at this point in time when NFTs are apparently used for money laundering. Somebody can make millions of dollars in legitimate transactions selling pixelated images and monkey jpegs. So I guess it's just the IRS doing its job well. This may be perceived as a villain agency but it's just performing its mandate. But what I'm particularly amazed at is how updated the IRS is on what's happening around. In my country, the Bureau of Internal Revenue is clueless and is still operating on archaic policies. as a bureau with authority, they are reasonable to make tax regulations on NFTs, especially now that NFTs are already categorized as digital assets, but the rates are quite high, just imagine up to 20% ++ of the value of the NFT assets. I don't think it will be a huge impact on the NFT ecosystems, because (if I recall correctly) those players who are interested in Play-2-Earn games are from countries which are not developed, like Latin America and South Asia, for example. Where the minimum wage is low. In the case of those in the United States, they are mostly interested in NFT's as a speculative vehicle, those who buy and hold APE NFT's would be encourage not to sell them, so they would not have to pay the taxes. It may translate in a decrease of the volume, but I am not sure yet if this could be positive in a context of less supply (less people selling) and the same demand. Title: Re: Taxes on NFT holders Post by: Wexnident on April 01, 2023, 05:56:26 AM It is what it is, I don't think it's anything bad, especially if we consider how the nft scene is (where 99% of it is rather questionable even imo). Well I do consider the scene to be rather dead at this point,so I'd say they're kind of late-ish? But regardless nfts ain't really going to disappear so them putting this out isn't really going to negatively affect what the want to happen.
I don't think it will be a huge impact on the NFT ecosystems, because (if I recall correctly) those players who are interested in Play-2-Earn games are from countries which are not developed, like Latin America and South Asia, for example. Where the minimum wage is low Wouldn't they just release a separate law when it comes to p2e earnings? Or just apply trading rules to it otherwise, people in mmos who sell in game currency should also technically be affected (or any other similar actions like it)Title: Re: Taxes on NFT holders Post by: CarnagexD on April 01, 2023, 07:19:10 AM This is the first time I heard of this but I am not surprise that NFTs are taxed well because the government will tax anything that earns profit. I think this is a big start for the taxation, once one state start, it'll just be a matter of time before the others do the same.
Title: Re: Taxes on NFT holders Post by: Hypnosis00 on April 01, 2023, 10:44:25 AM This is the first time I heard of this but I am not surprise that NFTs are taxed well because the government will tax anything that earns profit. I think this is a big start for the taxation, once one state start, it'll just be a matter of time before the others do the same. If they tax NFT, then they also imposed taxes on all crypto traders as it also generates profits. I'm not going to say it was fair but for me, it was not the right time to do it. I know it soon this will happen to crypto but it should be imposed together applying to everyone who has crypto in their wallets. Anyway, maybe we are going to be prepared for this. Sadly, NFT got the prize first of paying taxes and we never know who's next, meme coins holders or Bitcoin holders. Well, I'm not against it honestly as long as the tax was fair enough. Besides, we can also benefits the taxes we give to the government unless their is corruption. Title: Re: Taxes on NFT holders Post by: rokok lokal on April 01, 2023, 01:23:02 PM Yes, the new tax rules for NFT holders are sure to create uncertainty in the market. While selling quickly can provide relief, it is important to consider the potential consequences of such a decision. The value of the NFT may increase in the future, and those who sell now may lose out on potential profits.
Well, what we can conclude is to analyze investment strategies carefully and seek expert advice to make informed decisions and to be aware of the latest developments in the market can help you anticipate any changes that may affect your investment. Title: Re: Taxes on NFT holders Post by: disconnectme on April 01, 2023, 06:49:20 PM The issue with Taxes is that it never stops, they will always find something to tax, so not surprising they are coming for NFTs now, I for one have issues with some of the NFT transactions, it seems like money laundering to me, the irony of the matter is that ones those using NFTs for money laundering start paying their taxes from this, it legitimizes their trade and the money is made clean and whole of all dirt.
Title: Re: Taxes on NFT holders Post by: Bay_Harbour_Butcher on April 06, 2023, 05:09:40 PM this does not only happen in the US, taxation issues have been problematic for a long time, especially in my country, namely Indonesia, here crypto and NFTs are also taxed, the big problem is that it is not the NFTs that are taxed, but where the proceeds of the taxes go, only a small part is actually managed by the government for the state, some of the tax proceeds go into the wealth of government officials, through corruption and money laundering
Title: Re: Taxes on NFT holders Post by: Hispo on April 06, 2023, 05:49:21 PM That was unexpected, quite high considering this is rather a new kind of asset. On the other hand I find amusing that people at the IRS is willing to tax literally anything that has liquidity. In the early days on Bitcoin, I assume they were laughing at the idea of it becoming an actual currency or being accepted to some extend as a tool to transfer value in a decentralized way. As soon as liquidity, adoption and volume increased, they had stop the laughter and move onto taxing. imagine it paying tax on ingame purchases.. turns Steam into tax reporting agents of its customers rather than games retailers so soon you wont be able to play online games without KYC How things are going, it should not be a surprise Steam and Epic Games would ask for full KYC in a decade or earlier. But it would make more sense it was related to MMORPG's where people can partake in a secondary market of in-game currency, which gains are (of course) taxable. Yes, that does make sense in this kind of thing. Certainly more than taxing Steam and Epic Games Well, if somehow Steam or Epic launched a NFT game and players started to profit somehow out the in-game transactions, those who are making profit are the players and neither the distributor or the developers of the game, so the government cannot realistically tax Steam or Epic as distributors, because there is not profit coming from the game for them for declare, besides of course that they get from the royalties and micro-transactions. Title: Re: Taxes on NFT holders Post by: Renampun on July 05, 2023, 03:56:48 AM this does not only happen in the US, taxation issues have been problematic for a long time, especially in my country, namely Indonesia, here crypto and NFTs are also taxed, the big problem is that it is not the NFTs that are taxed, but where the proceeds of the taxes go, only a small part is actually managed by the government for the state, some of the tax proceeds go into the wealth of government officials, through corruption and money laundering I also come from Indonesia and I think this rule is 50:50 beneficial between the government and NFT owners, I'm sure we all know that some NFTs are used by some people to avoid taxes or money laundering even though with rules like this, new people those who want to try their luck at NFT will slowly back off and won't want to linger in NFT for long. in some countries the discussion about imposing taxes on cryptocurrencies, NFT and WEB3 is still hotly debated, the government is just avoiding them it is obvious that they are too eyeing investors' money in this new technology. Title: Re: Taxes on NFT holders Post by: Apocollapse on July 05, 2023, 08:50:26 AM Do you think KYC will be necessary to play online games? I don't see any important in this KYC when it come to online game. We don't need to talk about necessary or unnecessary, but it's technically possible every games would ask KYC because it's centralized. Most of your friends play that game and you want to play that game too in order to join their circle, will you submit your KYC? obviously yes since you're don't have a choice. NFT is centralized, so the government can collect the tax from NFT. It's different if we talk about decentralized project where it can't be controlled by anyone including the developer. |