IRS NFT Donations and Appraisals
Non-Fungible Tokens (NFT's) just like Bitcoin or other crypto coins are property that can be donated to charity. As with cryptocurrency NFT's are considered property by the IRS. In order to qualify for fair market value donation amounts the NFT's must have been held for more than one year. Additionally self created NFT's don't qualify for fair market value donation values.
IRS Form 8283 must be completed for each donation in excess of $500 and an independent appraisal in needed for NFT donations in excess of $5,000 by an independent qualified appraiser with a qualified appraisal report. Donations in excess of $500,000 require submission of the appraisal report with the tax filing of the donor.
NFT's that are part of a group of NFT's with regular sales activity on Open Seas or other NFT marketplaces can be adjusted for rarity, converted to Ethereum values and appraised like Ethereum. Daily market prices and standard rarity scores allow for comparible sales. NFT's that fall into this catagory can be appraised by me.
NFT's that are one of a kind art or that have no regular sales history are digital art and will require an art appraiser for IRS appraisal purposes.
NFT IRS donations are a new emerging trend. Please contact me if you have any questions about the facts regarding IRS NFT IRS donations in this article.
This article is not intended as legal, tax, financial or other advice. So check with your adviser on how the tax rules may apply to you.
Randy Tarpey CPA