When you sell an NFT for cryptocurrency, you are also subject to the capital gains tax. This means depending on whether you sell at a profit or a loss, you might have to pay a capital gain or incur a capital loss.
Notably, general tax principles should also apply to NFTs. For instance, when you receive an NFT as a gift, you may not have to pay tax on it. However, it is important to note that the IRS is yet to take a formal stance on the taxation of NFTs. Thus, it is possible that NFTs will be treated differently regarding taxes. For instance, some tax experts have commented that NFTs may be treated as collectibles for tax purposes. Collectibles generally have a higher tax rate relative to stocks, bonds, and crypto. Furthermore, NFTs may have different tax implications for different people. This depends on whether they are categorized as dealers or investors.
Finally, as an NFT enthusiast, you must pay attention to these legal considerations to avoid misconceptions about your rights. Also, it is necessary to stay informed as certain legal obligations concerning NFTs may evolve quickly.