Several NFT investors have found a new means to recoup their losses on their worthless digital assets through services being provided by Unsellable. The platform has polarized the crypto community, which has remained skeptical about its activities.
Unsellable buys NFTs that no one else will buy so the previous owner can use them for tax loss harvesting purposes. The website describes its services as an “Instant Liquidity” platform and a “Web3 junk removal.”
Unsellable Holds Over 15k NFTs
Since its launch, the platform has seen significant activity as multiple NFT investors are dumping their now worthless digital collectibles. There are over 15,000 digital assets in its collection at the time of writing, according to Etherscan data.
Unsellable also has a collection on OpenSea, which currently contains 4.6k NFTs. The most valuable is Token 75 from Kleeee02 NFTs, and it last sold for 7 ETH in August 2021. Given the value of ETH at the time was over $3000, the NFT would have cost the owner over $21,000. Presently, the best bid for the asset on OpenSea is 0.0043 WETH ($5.15).
The platform also allows users to sell off the assets in bulk with up to 1000 NFTs in one transaction. One user sold several NFTs from the GoopGirls, while another sold several WanderVerse and Derpy Birds. Unsellable presently supports Ethereum blockchain alone. Each transaction costs an average of 0.0033 ETH (about $4) per transaction. Multiple NFTs in one trade costs less than 0.08 ETH (about $95) plus gas.
What Does The Law Say
The US Internal Revenue Service (IRS) recently classified NFTs as digital assets subject to capital gains tax. Under this classification, investors must report any digital asset sold to generate income to the authorities.
Meanwhile, US tax laws allow investors to offset capital loss with other capital gains. A Dec. 31 tweet from Twitter user Fash said:
“The more tax losses you write, the less you’ll owe from capital gains. This method allows you to pay less in taxes than you would have with just showing mostly gains.”
Crypto Community Reaction
Some crypto community members have criticized the venture. Robinhood’s Senior Director Jeffrey Lyon said it is “totally illogical. If you want to liquidate a NFT you accept the highest available collection offer and get some actual money (ok, WETH).”
Several other community members questioned whether this was legal, while others labeled it tax evasion.
Disclaimer
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.
Source: https://beincrypto.com/nft-investors-heap-into-unsellable-to-offset-tax-losses/