Taxation of the Purchase and Sale of NFTs

Andrea (Andie) S. Kramer | McDermott Will & Emery

Andrea (Andie) S. Kramer has a sophisticated and unique multi-disciplinary legal practice that covers all aspects of financial transactions, derivatives, cryptocurrency, and energy transactions. She focuses on taxation, regulation, contract design, documentation, and trading operations. Andie helps clients successfully resolve difficult legal situations, including federal and state regulatory matters, adversarial proceedings, and tax planning and compliance issues. She addresses interrelated business objectives, regulatory and legal requirements, and public policy.

In recent years, Andie has focused on federal administrative and legislative counseling, financial risk management and hedging procedures, cryptocurrency, proprietary trading policies, codes of conduct and internal controls, tax compliance and controversy, and insurance product design. Andie provides compliance advice with respect to the rules that apply to swap dealers, major swap participants, commercial end users, and financial end users. She works closely with a wide range of market participants to evaluate their use of financial products and cryptocurrency and the effect on their operations, existing contractual relationships, regulatory requirements, and tax obligations. Andie designs, structures, and defends financial product transactions, including complex hedging and risk management programs.

Andie is a major contributor to the tax literature on cryptocurrency transactions and reporting obligations for US and international users, including personal use transactions, miners, stakers, lenders, straddles, mixed straddles, section 1256 contract treatment, wash sales, tax basis, tax classification as commodities or securities, and the legal effect of IRS pronouncements cryptocurrency. She was named the 2020 Go-To Thought Leader in Virtual Currency Tax by the National Law Review and a 2021 Readers’ Choice Top Author in cryptocurrency taxation by JD Supra.

Andie served as an adjunct professor at Northwestern University School of Law for over 20 years, where she taught classes on the taxation of financial derivatives. Andie is a founding member of the Firm’s Diversity Committee and previously served as founding chair of the Gender Diversity Committee. She has also served on the Firm’s Management Committee and Compensation Committee.

Andie is co-author of the two-volume treatise, Financial Products: Taxation, Regulations, and Design (4th Edition 2021). She is also an editor of and contributor to Energy and Environmental Project Finance Law and Taxation (2010) and Energy and Environmental Trading (2008).

I. What We Know About the Taxation of NFTs | 12:00pm – 12:08pm
II. Limited IRS Guidance | 12:08pm – 12:16pm
III. Tax Issues on Creation of NFTs | 12:16pm – 12:24pm
IV. Taxation of Purchases of NFTs | 12:24pm – 12:32pm

a. Investors
b. Collectors
c. Dealers

V. Taxation of Sellers of NFTs | 12:32pm – 12:40pm

a. Creators
b. Investors
c. Collectors
d. Dealers
e. Special Issues for Not-for-Profits

VI. Tax Reporting Requirements | 12:40pm – 12:50pm
VII. Wrap-Up | 12:50pm – 1:00pm