NFT creators could be looking at three taxable events when they sell a self-created NFT: income tax on the sale itself, self-employment tax on the sale, and income tax generated by royalties. Unfortunately trading NFTs is not as simple as trading other capital assets (like stocks or real estate). Gain on conversion of crypto may be subject to the additional 3.8% Net Investment Income Tax (NIIT) if the taxpayer’s income is high enough. Depending on the holding period for the ethereum the taxpayer is either going to pay ordinary income tax or capital gains tax on that $90,000. Tax practitioners who specialize in the digital economy have been calling for more guidance for both cryptocurrency and NFTs.

Source: Forbes August 10, 2021 14:48 UTC