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.