One of the challenges that come with novel assets like NFTs is how exactly taxes are to be paid on them. After all, most existing tax codes were created long before NFTs were even in existence. As such, the treatment of NFTs under tax codes is a question that lingers all over the industry. 

Luckily, the U.S. Internal Revenue Service (IRS) has given more clarity to this with its updated tax codes.

The new draft that the IRS released offers some clarification for those who file with form 1040. More specifically, the terminology used for one of the asset classes has been changed from “virtual currency” to  “digital assets.” Not only has this name been changed but the document explicitly mentions NFTs and notes that they are included.

“Digital assets are any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology. For example, digital assets include non-fungible tokens (NFT) and virtual currencies, such as cryptocurrencies and stablecoins,” the document says. 

This move clears up a lot of potential confusion about the place of NFTs within tax proceedings and means that those who invest in them can stay on the right side of the law.

Discover the world of NFTs >> The Ultimate NFT Guide

Want more? Connect with NFT Plazas

Join the Weekly Newsletter
Join our Discord
Follow us on Twitter
Like us on Facebook
Follow us on Instagram

*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.

The post IRS Makes Language Change that Includes NFTs appeared first on NFT Plazas.