How NFT sales are taxed in the US and what to report
An NFT sale at a profit is usually a capital gain in the US. Your taxable gain is what you received minus your cost basis, and you report it on Form 1040.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
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- Selling an NFT at a profit usually creates a capital gain.
- Your gain is sale proceeds minus cost basis.
- A swap or a spend is a taxable sale.
- Creating or receiving NFTs can be ordinary income.
- An NFT is not automatically a collectible.
NFT sales in the US are taxed as property sales. If you sell at a profit, you usually owe capital gains tax and report it on your federal return. This guide covers which sales are taxable, how to figure your gain, and what records to keep. You need your purchase price, sale proceeds, and transaction dates.
Which NFT sales are taxable?
The IRS treats NFTs as property, not currency, so most sales follow property rules. Selling at a profit usually triggers capital gains tax. Creating an NFT or receiving one as payment for goods or services in a business is generally ordinary income. Buying with US dollars and holding it creates no tax on the NFT itself.
- Selling at a profit: the gain is usually capital.
- Creating and selling: your earnings are ordinary income.
- Receiving as payment for goods or services in a business: generally ordinary income.
- Swapping an NFT for another NFT or for crypto: a taxable sale.
- Spending an NFT on goods: a taxable sale.
How to report NFT sales step by step
Your taxable gain is sale proceeds minus your cost basis. Report the result on your federal return and answer the digital assets question on Form 1040.
- 1Gather sale detailsNote the sale date and the US dollar value you received, including fees.
- 2Find your cost basisBasis is generally what you paid in US dollars, including fees. If you received the NFT as income, use the value you reported.
- 3Subtract basis from proceedsProceeds minus basis is your gain or loss. A positive number is a capital gain.
- 4Check your holding periodIt starts the day after you acquired the NFT and ends on the sale date. More than one year is usually long term.
- 5See if collectible rules applyAn NFT is not automatically a collectible. If it represents art, a long term gain may face a different rate.
- 6Report on your returnAnswer the digital assets question on Form 1040 and report the sale, even with no gain.
What records should you keep after filing?
Keep records that support every number on your return. They show basis, proceeds, and holding period if the IRS asks.
Frequently asked questions
You may not owe tax on that sale. A capital loss can offset capital gains and, within limits, ordinary income. You still report the transaction.
Use the fair market value in US dollars on the date you received it. That amount usually becomes your cost basis. Swapping crypto for the NFT is also taxable.
Fees you pay to acquire the NFT usually become part of your cost basis. Selling fees usually reduce your sale proceeds.
