Tax-loss harvesting on NFT investment?

Forum|Forum|5 years ago
June 11, 2021
1 reply
1 view

Non-fungible tokens (NFT) are being treated as collectible for tax purposes. I wonder if tax-loss harvesting applies to them?

M-MTax

Level 15

It doesn't matter whether NFTs are classified as collectibles......if you hold them for investment purposes rather than for personal use then you can deduct the loss.....as a capital loss unless they were somehow business property.

RS3Author

Level 2

I indeed hold them for investment purposes so I understand now I am able to deduct a loss. Now what about trading them: I sometimes like to trade one NFT (A) for two others (B and C) because it provides me with options, even when this means at times that B plus C is worth less than A (meaning a loss for me). This happens for example when I sell one expensive NFT for two cheaper ones for easier re-sale in the future. Question: how do I value this trade for tax purposes? Do I for example take the last known sale price of B and C and add those up to determine the sale price of A?