Saturday, July 13, 2024

CryptoPunks NFT sold for $3.3 million – loss or profit?

A rare CryptoPunks NFT #4156 was sold for 2,691 ETH worth about $3.3 million. It may seem that the seller got a great deal but some consider it a lowball offer. Presently, ETH is down to $1,218, so significant loss for the seller. But then it could be a profit if one considers taxes.

An NFT enthusiast who owns Punk #3938 tweeted that the token could have easily sold for $25 million. Another said $3.2 million is a joke for that ape but it might be tempting. NFT #4156, which has an ape appearance and a blue bandana, was purchased for 2,500 ETH in December 2021. At that time, ETH was trading more than three times today’s price. This means, the seller earned a small profit in Ethereum but suffered heavy losses in terms of US dollars – a loss of $7 million.

If the NFT holder writes off the sale as a $7 million loss on his or her taxes, it could result in a financially beneficial move. The IRS might look at the losses and the seller doesn’t have to convert the ETH into US dollars to write off the loss. This is a common practice that traders use to reduce their capital gains liability. Reducing capital gains income by $7 million could also lower the seller’s tax rate, thus more tax benefits.

A Doodles NFT holder believes it’s really smart for tax loss harvesting if the #4156 (initial) holder will not make a positive return on that investment anytime soon. The person, Janik.sol, who purchased the rare CryptoPunks NFT sees the deal as a gateway to generational wealth. He said the punks can be worth something.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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