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Reporting NFTs for Crypto Taxes in ZenLedger

NFTs, or Non-Fungible Tokens, are cryptographic tokens that represent unique digital collectibles or real-world assets.

How are NFTs taxed?

According to IRS Notice 2014-21, NFTs, just like other cryptocurrencies, are assets and subject to taxes. 

Tax Treatment of Various NFT Transaction Types

Purchasing NFTs:

Buying NFTs with cryptocurrencies is a taxable event on the crypto that was used. In contrast, purchasing NFTs with USD is not a taxable event.

Minting NFTs:

If you mint NFTs using cryptocurrency to pay gas fees, it is considered a taxable event.

Selling NFTs:

Selling NFTs in exchange for USD or any other fiat currency is a taxable event.

Trading NFTs:

Exchanging NFTS for another NFT or for any other cryptocurrency is a taxable event.

NFT Airdrops:

If the airdropped NFT has monetary value, it is considered a taxable event and is taxed as ordinary income. The USD equivalent of the NFT at the time when you received it corresponds to the amount of income. 

How to determine the cost basis of NFT?

The fair market value of the NFT is not available, so in most cases you will need to enter the cost basis yourself. Here are some tips/examples that will help:

  • If you purchased an NFT for $100, then $100 is the cost basis for that NFT.
  • Suppose on January 1, 2025, you purchased an NFT using 0.5 ETH. The USD equivalent of 0.5 ETH on that date is the cost basis of that NFT.
  • Assume that on December 31, 2025, you minted an NFT using 0.01 BTC. The fair market value of 0.01 BTC on that date is the cost basis of that NFT.
  • If you are airdropped some spam NFTs, you can mark those transactions as ignored.

Note: Zenledger also allows you to carry over the cost basis when trading your original NFTs for other NFTs. To enable or remove that, select the user icon > Tax Settings and check or uncheck ‘NFTs transfer cost basis when traded for other NFTs.’

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How to import NFT transactions into Zenledger?

You can import NFT transactions into ZenLedger manually, through CSV, or via wallet address.  

This information is for informational purposes only and not for the purpose of providing financial, legal, investment, accounting, or tax advice. You should contact your CPA or other qualified tax professional to obtain advice regarding your particular issue or problem.