Trading, Taxes, Holding, & Cash Flow

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Trading, Taxes, Holding, & Cash Flow With Collectibles
I think one of the biggest deterrents to making money with NFTs is actually making money on a consistent basis. So many stories you hear in the news are about 1-time sales of insanely priced meme art. A single BAYC or MAYC might sell for several million dollars, but that’s called a windfall, not a business.

A business buying, selling, and trading NFTs is something that you would do successfully on a consistent basis.

Even if you were lucky enough to buy an NFT that became oman whatsapp number data valuable in the future, a one-time windfall of a million dollars is not something you can live off for the rest of your life.

First, you’d need to pay taxes, and the taxes on collectibles in the United States is actually higher than most other forms of income at 28%, with a possible additional 3.8% on top of that. So immediately chop of 1/3 of your sales price. Then, you would need to re-invest at least some of that money into subsequent NFTs, which would also need to be successful. Rinse. Repeat.

The rinse and repeat part is the hardest. Can you successfully identify a successful NFT project over and over again to create consistent cash flow to pay a mortgage? Or are you just hoping on discovering the next million-dollar cute animal picture?

An alternative view could be that you want to hold the art for a long period of time, and cash out in 10 or 20 years in the future. Assuming that we’re still early in the NFT craze and the market will mature in the future, there a possibility that some projects with long term value could be worth tens of millions of dollars in the future.