In the nonfungible token (NFT) space, things are getting so bad that collectors are now selling them as tax write-offs.
NFT holders are increasingly offloading their digital collectibles. Some tax experts are now recommending harvesting losses made by “worthless NFTs.”
Selling at a loss can create tax write-offs that can reduce annual income tax bills. Tax-loss harvesting has become a key strategy this year as crypto and stock markets tank.
Strategically selling at a loss can offset gains from other investments. Savvy investors employ this strategy throughout the year to keep from accumulating excessive taxable gains.
Furthermore, a new website has been launched to help with the sale of unsellable NFTs.
Selling Worthless NFTs
The recently launched Unsellable website claims to help those with NFTs that have plunged in value. It noted that tax-loss harvesting can become problematic when NFTs are included.
“While every investment class has its losers, many of the NFTs we invested in were not only down big; they were now totally worthless… illiquid… unsellable.”
The website was created to provide liquidity for otherwise unsellable NFTs. The platform buys the tokens for pennies and provides the official receipt for tax purposes. Furthermore, it is keeping all of the tokens to build “The Unsellable Collection” to become the “ultimate artifact of the early days of web3.”
Additionally, the collection is listed on OpenSea and contains 38 items. The most expensive one, “Impermanent Digital #3238,” is listed for 0.299 ETH (approx. $354, so not totally worthless).
The platform charges a transaction fee of 0.0032 ETH plus gas. It offers 0.0000064 ETH (roughly $0.01) for each NFT it buys. The product, however, is the tax receipt which can lead to significant savings.
Crypto taxes can be a minefield so Unsellable recommends using a crypto-competent CPA.
Nonfungible Token Market Outlook
NFTs have been battered this year along with the wider crypto market. The Nonfungible.com market tracker showed around $86,868 in NFT sales on Nov. 28. By comparison, this figure was over $100 million per day this time last year.
The number of sales has slumped from around 125,000 per day in November 2021 to just 10,000 per day at the moment.
The most popular collection over the past week has been BAYC, with $20 million in secondary sales, according to CryptoSlam.
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