Technology, Data, Computer Network, Big Data

Part Four in our series discusses U.S. federal income tax issues relating to Non-Fungible Tokens (NFTs) and provides an overview of how NFTs may be treated for U.S. federal income tax purposes.

IRS Guidance

1. Notice 2014-21
At the time of this publication, the U.S. government has only passed legislation
addressing tax reporting requirements for “brokers” of “digital assets.” There is
therefore no legislative guidance regarding the taxation of NFTs. Likewise, the IRS has
not addressed NFTs in any of its limited cryptocurrency guidance. Notwithstanding,
Notice 2014-21, which is the IRS’ first attempt to address the taxation of convertible
cryptocurrencies, serves as a point of reference.

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