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Are there NFT plans that make sense? The tax fraud schemes make sense for now. Party A makes 10 NFTs and sells 1 to Party B for $10,000. Party B makes 10 NFTs

by 300bps 5y ago

Are there NFT plans that make sense? The tax fraud schemes make sense for now. Party A makes 10 NFTs and sells 1 to Party B for $10,000. Party B makes 10 NFTs and sells 1 to Party A for $10,000. They both then donate their remaining NFTs to a charity and take a $90,000 tax write-off each. Will work until the IRS is able to hire the additional 80,000 enforcement agents they’ve asked for.

lmkg 5y ago
It has been pointed out that NFTs have actually been around for a few years, but their rise in popularity coincides with the IRS tightening some rules about using artwork for tax write-offs.
- 300bps 5y ago
  Tightening rules does nothing if they aren’t enforced. Otherwise why did the IRS pay out $30MM in refunds for “Slavery Credits” that had no basis in law? https://www.cbsnews.com/news/irs-pays-30m-in-slavery-credits/ https://www.cbsnews.com/news/irs-pays-30m-in-slavery-credits... There are literally thousands of examples of things like this.
  - deleted 5y ago
    [deleted]
mminer237 5y ago
Are charities really going to provide receipts that their donated NF-what?s are worth $180,000? Is the market liquid enough for them to resell them? If it is, then it's no different than if A & B resold them and donated the money. If not, why would charities go along with it? It's easy to find a small museum to donate small amounts of artwork to at an inflated value. But what charity wants NFTs?
- turkishmonky 5y ago
  With the money at stake, it would be pretty easy for both parties to tangentially set up a 501c3 whose purpose is to display gifted NFTs to the public
  - mminer237 5y ago
    I think that would be hard to get IRS approval for. Regardless, the right to display a work is its copyright, which is unrelated to NFTs anyway. And donating intellectual property to charities with high claimed values isn't anything new. That's why in 2004 the American Jobs Creation Act required that any donated intellectual property be valued at the lesser of its cost basis and its fair market value. (See: 26 USC § 170(e)) So in your example, each would accrue a $10,000 income tax liability by their sale and be able to write off a $10,000 gain by their donation's basis, accomplishing nothing.
- negroni 5y ago
  > But what charity wants NFTs? I attended an event last night in a museum where over $150k was raised for local Charities by auctioning off NFT Art. It will probably become more common than one might imagine.
cardosof 5y ago
If NFT is the 21st century equivalent for the money laundering and tax evasion schemes with art pieces in the past centuries, then, being long ETH seems like a good strategy, disregarding the morality of it.

by 300bps 5y ago

lmkg 5y ago

It has been pointed out that NFTs have actually been around for a few years, but their rise in popularity coincides with the IRS tightening some rules about using artwork for tax write-offs.

300bps 5y ago
Tightening rules does nothing if they aren’t enforced. Otherwise why did the IRS pay out $30MM in refunds for “Slavery Credits” that had no basis in law? https://www.cbsnews.com/news/irs-pays-30m-in-slavery-credits/ https://www.cbsnews.com/news/irs-pays-30m-in-slavery-credits... There are literally thousands of examples of things like this.
- deleted 5y ago
  [deleted]

mminer237 5y ago

Are charities really going to provide receipts that their donated NF-what?s are worth $180,000? Is the market liquid enough for them to resell them? If it is, then it's no different than if A & B resold them and donated the money. If not, why would charities go along with it? It's easy to find a small museum to donate small amounts of artwork to at an inflated value. But what charity wants NFTs?

turkishmonky 5y ago
With the money at stake, it would be pretty easy for both parties to tangentially set up a 501c3 whose purpose is to display gifted NFTs to the public
- mminer237 5y ago
  I think that would be hard to get IRS approval for. Regardless, the right to display a work is its copyright, which is unrelated to NFTs anyway. And donating intellectual property to charities with high claimed values isn't anything new. That's why in 2004 the American Jobs Creation Act required that any donated intellectual property be valued at the lesser of its cost basis and its fair market value. (See: 26 USC § 170(e)) So in your example, each would accrue a $10,000 income tax liability by their sale and be able to write off a $10,000 gain by their donation's basis, accomplishing nothing.
negroni 5y ago
> But what charity wants NFTs? I attended an event last night in a museum where over $150k was raised for local Charities by auctioning off NFT Art. It will probably become more common than one might imagine.

cardosof 5y ago

If NFT is the 21st century equivalent for the money laundering and tax evasion schemes with art pieces in the past centuries, then, being long ETH seems like a good strategy, disregarding the morality of it.