2023 NFT Market Changes
A new service exploded as 2022 ended. The new service offered to buy worthless NFT's for 1 cent in Ethereum so the owner could take a tax loss. Over 15,000 NFT's were sold to the website in December 2022 alone. UnsellableNFTs make big splash in the NFT market even if they did not make any money.
As 2023 starts a new mass appeal NFT release seems to be happening. Donald Trump unvield his NFT trading cards to his fan base and it was sold out. Reddit opened over 1 million crypto wallets with its free NFT that can be used as a Reddit avatar. These free or low cost NFT's will hopefully not end up in the unsellable NFT account at the end of 2023.
Typically part of NFT sales go to charity or a chartiy will auction off NFTs but a new avenue to emerging for donating NFTs. NFT's can be donated to the charity of the donors choice. The donor receives a tax deduction for the donation. Also the capital gain tax is avoided on any appreciation in the NFT's value from the date it was purchased. The donor does have to get an appraisal and file IRS Form 8283 if the value of the donation is over $5,000.
Fidelity Charitable receives more Bitcoin and crypto donations than any other charity. Fidelity Charitable received patents in the NFT space and is issuing its own NFT to donors. Fidelity Charitable appears to be moving into the NFT donation space in 2023.
As an NFT appraiser I can appraise NFT's that have regular daily or weekly market activity and are considered investments. I can't appraise NFT's that are art or one of a kind NFT's with no active market. For any NFT's in this art space I would refer the donor to an art appraiser.
In conclusion 2022 was a difficult year for the NFT market and the crypto market. The crypto industry survived and 2023 should be a much better year filled with new innovations and new NFT's and crypto projects.
Randy Tarpey CPA