What is an NFT, and is it taxable? CPA and TurboTax tax expert Lisa Greene-Lewis joins TheStreet for an introduction to NFTs and taxes.
[MUSIC PLAYING] TRACY BYRNES: So everyone is talking about NFTs these days. Heck, Gronk has an NFT. What is it? Is it taxable? The answer most certainly is yes. But how do we figure this out? Lisa Greene-Lewis, CPA and TurboTax expert, is here with us right now. OK, Lisa, first of all, what the heck is an NFT?
LISA GREENE-LEWIS: It's a Non-Fungible Token, and it's data stored in a blockchain, and it can be either sold or traded.
TRACY BYRNES: Right. And many people will still say, huh? But that said, there's a lot of people investing in these things. And so it should just be assumed that if you're buying and selling something, there are tax implications, right?
LISA GREENE-LEWIS: Right. And with a non-fungible token, so you can either be a creator of one, or you can just be an investor. So if you're a creator, think of it as like you're creating some artwork, but it is a digital token in a blockchain. But it's still artwork. So if you're a creator, you would be taxed as if you sold something and you're self-employed.
TRACY BYRNES: Right. So in theory, you got to pull out a Schedule C for this, don't you, if you buy and sell these?
LISA GREENE-LEWIS: Right. When you buy and sell these, you would receive a 1099-NEC reporting your income, and you're correct. It would go on the Schedule C, and you would also-- I mean, you may have to pay self-employment taxes on that income.
TRACY BYRNES: Right. And but it's also like an investment, right? So then there's capital gains taxes as well?
LISA GREENE-LEWIS: Right. So if you're not a creator and you're just investing in these NFTs, then you would pay capital gains, just like a stock. And so you would either have long-term capital gains or short-term capital gains depending on how long you held the NFT.
TRACY BYRNES: So that then would go on the Schedule D, right? The Capital Gains and Losses schedule.
LISA GREENE-LEWIS: Yes.
TRACY BYRNES: This is crazy. But you have to follow the rules, and the IRS will come down and find you if money traded hands. Lisa Greene-Lewis, thank you so much for taking the time.
LISA GREENE-LEWIS: Thank you for having me. [MUSIC PLAYING]
Whether you have stock, bonds, ETFs, cryptocurrency, rental property income or other investments, TurboTax Premier has you covered. Filers can easily import up to 10,000 stock transactions from hundreds of Financial Institutions and up to 4,000 crypto transactions from the top crypto exchanges. Increase your tax knowledge and understanding all while doing your taxes.