New IRS Stablecoin and NFT Tax Guidelines
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The Internal Revenue Service (IRS) of the United States has published new tax regulations for stablecoins and non-fungible tokens. The updated standard replaces the one from the previous year, which classified stablecoins and cryptocurrency as "virtual assets."
The same tax class will apply to NFTs and stablecoins
The Internal Revenue Service has provided clarification to NFT investors about how it would tax their assets in a revised IRS tax guide 2022. The same tax regulations will apply to all digital assets, including cryptocurrencies, stablecoins, and non-fungible tokens.
Everyone who "disposed of any digital asset in 2022" via a sale, exchange, gift, or transfer would now be required to declare and pay capital gains tax on the transaction, according to the taxman.
Additionally, the new regulations mandate that people who may have received NFTs as payment for services rendered or who have sold any digital assets they have on hand must report these NFTs as capital income.
According to IRS guidance, a specific asset will be treated as a digital asset for federal income tax purposes if it has characteristics of digital assets. According to the IRS, NFTs are classified as "collectibles," such as antiques, diamonds, or valuable art, and as such, they are subject to different tax rates than stocks or bonds.
In accordance with the tax manual, collectibles will be subject to a 28% tax rate as opposed to other assets like equities, bonds, and cryptocurrencies, which will be subject to tax rates of 0%, 15%, and 20%, respectively, depending on seller income.
Tax authorities change their focus on cryptocurrency
Recently, many nations across the globe began levying taxes on digital assets, fixing the flaw that most investors in the industry had been enjoying for years. Portugal, which was formerly thought to as a secure haven for cryptocurrency investors, is a recent ideal example. The nation implemented a 28% tax on cryptocurrency profits generated over the previous year last month.
Other platforms that provide NFT services have been drawn to implement various regulations to reduce these profits as a result of the current zeal on hunting NFT investment gains. In this instance, Apple only recently made the decision to allow in-app NFT sales on its platform with the intention of siphoning off 30% of the usual commission fees from such transactions.
Thanks to Dominic Kimani at Business 2 Community whose reporting provided the original basis for this story.