Crypto traders are converting worthless NFTs into tax breaks. They’re using a service started just for that purpose. Others are taking advantage of IRS tax loopholes for tax breaks on their losses from BTC, ETH, and others this year.
That’s how bad the crypto winter is getting as the frost sets into planet earth’s northern hemisphere. But in a sign of persistence and entrepreneurial spirit, crypto markets are reacting. NFT buyers are now helping people with their underwater smart contracts. They’re helping sellers unload their junk NFT and get an official receipt for their tax breaks.It’s not unlike what happened after the 2008 financial crisis.
Yet it is also totally unlike what happened after the 2008 crisis. Because it was the government and central bank that bought most of those toxic assets. It was like a big institutional bailout for the banks that took losses in the housing and lending bubble of that decade.Instead, with loss-laden NFTs, the free market and entrepreneurship are prevailing again. NFT buyers have emerged to solve a problem created by the free market and entrepreneurship.
Offloading their unsellable NFTs isn’t the only way crypto investors are hauling tax breaks off of this crypto winter’s brutal losses. They’re also selling their unrealized losses and rebuying to realize a loss for tax purposes while holding their long positions for a future rally.The tax loophole is that cryptocurrencies are considered property, not a security, so the 30-day stockdo not apply to them.
Microstrategy took advantage of tax breaks from this loophole in Q4 2022, according to a recent filing. The Michael Saylor-led company