New IRS Guidance for the Taxation of NFTs: Applicable Tax Rules, NFT Transactions, Issues for Attorneys and Taxpayers

Strafford

This CLE/CPE webinar will provide tax counsel, accountants, and other advisers with a critical analysis of new IRS guidance regarding the tax treatment of non-fungible tokens (NFTs) and reporting obligations for taxpayers and investors. The panel will discuss recent IRS Notice 2023-27, treating NFTs as collectibles and the impact on taxpayers. The panel will also discuss the difference between NFTs and other cryptocurrencies, outline applicable IRS rules, and discuss proper reporting for NFTs.

Description

The creation and sale of NFTs have significant tax implications for sellers, purchasers, and investors. In response to the explosion of NFTs, the IRS recently released guidance under Notice 2023-27 specifically focused on the tax treatment of NFTs. Tax counsel and accountants for clients holding and selling NFTs must understand this new IRS guidance, as well as applicable tax rules and reporting requirements for these transactions.

Under Notice 2023-27, the IRS intends to tax certain NFTs as "collectibles." This characterization of NFTs directly impacts (1) whether the gain from a sale is taxed at a capital gains rate of 28 percent versus a more favorable capital gains rate for assets not characterized as collectibles and (2) whether a transfer of an NFT to an individual retirement account (IRA) results in a distribution from the IRA.

Tax counsel and advisers must recognize key issues stemming from recent IRS guidance, understand the applicable tax rules for NFTs and the differences from cryptocurrencies, consider the proper reporting and tax treatment for NFT transactions, and what the implications are for the IRS issuing proposed guidance.

Listen as our panel discusses the impact of IRS Notice 2023-27, critical tax considerations for NFT transactions, and other key issues for NFTs.

Outline

1. Overview of NFTs
2. Applicable tax rules
3. IRS Notice 2023-27
4. Characterization of NFTs and NFT transactions
5. Reporting and compliance

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