The US Internal Revenue Service (IRS) is contemplating the possibility of treating non-fungible tokens (NFTs) similarly to other collectibles such as art, stamps, and fine wine for taxation purposes. This move is likely to affect those who include digital assets in their retirement plan. The IRS is seeking feedback to provide guidance on the tax treatment of NFTs and is implying that it may be less favorable under capital gains tax rules. The statement encourages the public to comment on the proposal before June 19 and to consider issues such as when an NFT constitutes a work of art.
Until further guidance is provided, the IRS will treat NFTs like their underlying asset. In October, the IRS updated its instructions to include NFTs and cryptocurrencies in tax forms.