NFT Collector Taxes: Buying, Minting, Selling and Swapping NFTs

Most NFT collectors think about tax when they sell. The first taxable event usually happens earlier, when they buy. If you paid for an NFT with ETH or another token, you sold that token to get it.

This guide is for collectors and traders, people who buy and sell NFTs. If you create and sell your own NFTs, start with the existing guide on NFT creator taxes.

NFTs are digital assets

The broker regulations define a digital asset broadly in Treas. Reg. 1.6045-1(a)(19), and they define a specified nonfungible token in paragraph (d)(10)(iv) as a digital asset that is indivisible, contains its own unique identifier, and does not give the holder an interest in excluded property such as a security or commodity. The gain and loss rules for digital assets in Treas. Reg. 1.1001-7 and the basis rules in 1.1012-1(h) apply to NFTs the same way they apply to fungible tokens.

Buying an NFT with crypto

When you pay 2 ETH for an NFT, you dispose of 2 ETH. Treas. Reg. 1.1001-7 measures your amount realized on the ETH by the fair market value of the NFT you received, and where that value cannot be determined with reasonable accuracy, by the value of the ETH you transferred. Your gain or loss on the ETH is that amount minus your basis in the 2 ETH. The IRS FAQs reached the same result for earlier years: exchanging virtual currency for other property produces capital gain or loss (Q16 and Q17).

Your basis in the NFT is its cost, which under Treas. Reg. 1.1012-1(h)(3) is the same fair market value used to compute the amount realized on the ETH. Your holding period in the NFT starts fresh.

Buying with dollars is different. A purchase for cash is not a disposition of anything. Your basis is the cash paid plus allocable transaction costs.

Minting and gas fees

Minting is usually an exchange of crypto for a newly created NFT, so it follows the same rule as buying. The fees are where people get tripped up.

For an exchange of one digital asset for another, Treas. Reg. 1.1012-1(h)(2)(ii)(B) allocates the transaction costs entirely to the disposition of the asset you gave up. So the gas fee for minting or buying an NFT with ETH reduces your amount realized on the ETH. It does not increase your basis in the NFT. And the ETH used to pay the fee is itself a disposition under 1.1001-7(b)(1)(ii). See gas fees and transaction costs.

A mint that fails still costs gas. The ETH spent on a failed transaction is gone, and you should record that disposition even though no NFT arrived.

Selling an NFT

Selling an NFT for ETH or another token is a disposition of the NFT. Your amount realized is the value of what you receive, reduced by transaction costs, including marketplace fees. Your gain or loss is that amount minus your basis in the NFT. The ETH you receive takes a basis equal to its value and starts a new holding period.

If you held the NFT more than one year, the gain is long-term. Some NFTs may be collectibles for rate purposes, which caps long-term gain at 28 percent rather than the usual lower rates. See NFTs as collectibles.

NFT-for-NFT swaps

Trading one NFT for another is an exchange of digital assets differing materially in kind. You dispose of the NFT you give up at the value of the one you receive, and the new NFT takes that value as its basis. If neither NFT has a reliable price, document how you valued them. Treas. Reg. 1.1001-7(b)(4) says that when the value of what you receive cannot be determined with reasonable accuracy, you look to the value of what you transferred.

Airdropped and free NFTs

NFTs sometimes arrive unrequested, as promotions or rewards for holding another token. Applying the dominion and control reasoning of Rev. Rul. 2019-24 to property received for free, an NFT you can transfer or sell is income at its fair market value when received, and that value is your basis. Many such NFTs have no market value at all, in which case the income is zero and so is the basis. Spam NFTs that you never claimed or used are a record-keeping nuisance, not usually a tax item, but keep a note of how you treated them.

Losses and dead collections

Selling an NFT for less than your basis produces a capital loss. Capital losses offset capital gains, and up to $3,000 of excess loss a year ($1,500 if married filing separately) offsets other income under section 1211(b).

Holding an NFT whose market has collapsed is different. In CCA 202302011, IRS Chief Counsel concluded that a cryptocurrency that had fallen to a fraction of a cent but still traded was not worthless and had not been abandoned, so no loss was allowed. The same logic would apply to an NFT that still has a market. Selling it, even for a tiny amount, is the cleanest way to realize the loss. See worthless crypto tokens.

Marketplace fees and royalties on resale

When you sell on a marketplace, the platform usually takes a fee and may route a creator royalty out of the sale price before you receive the rest. Treas. Reg. 1.1001-7(b)(2)(i) defines transaction costs as amounts paid to effect a sale, including transaction fees and commissions, and those costs reduce your amount realized. Marketplace fees fit that description. A royalty withheld from your proceeds as a condition of the sale is reasonably treated the same way. Either way, report the gross price, the costs, and the net, and keep the transaction record that shows each piece.

A worked example

In 2025 you buy an NFT for 1.5 ETH when ETH is worth $2,000. Your ETH basis is $1,200 per unit. You pay a network fee of 0.01 ETH. In 2026 you sell the NFT for 3 ETH when ETH is worth $3,000, and the marketplace keeps 5 percent.

• Purchase: you dispose of 1.5 ETH. Your amount realized is the NFT's value, $3,000, reduced by the fee of about $20, so about $2,980. Your basis in those ETH is $1,800. Gain on the ETH: about $1,180, short-term or long-term depending on when you bought the ETH.
• Fee: the 0.01 ETH used for gas is itself disposed of, with a small gain on its own basis.
• NFT basis: $3,000, its cost under Treas. Reg. 1.1012-1(h)(3).
• Sale: you receive 2.85 ETH after the 5 percent fee, worth $8,550. Gain on the NFT: $5,550, long-term if more than one year passed since purchase.
• New ETH: 2.85 units with a $3,000 per unit basis and a fresh holding period.

One NFT round trip, at least four tax entries. That is normal.

Reporting and records

Brokers may report sales of specified NFTs on Form 1099-DA, and Treas. Reg. 1.6045-1(d)(10)(iii) allows an optional aggregate method that requires a report only if a customer's aggregate gross proceeds from those sales exceed $600 for the year. Many NFT trades happen on platforms that are not brokers for these rules. Either way, you report every sale on Form 8949. See Form 1099-DA explained.

• Treat each NFT as its own lot, identified by contract address and token ID.
• Record the purchase or mint transaction, what you paid with, its value, and the fee.
• Record the sale transaction, what you received, its value, and marketplace fees.
• Keep the basis of the crypto you spent, because every purchase is also a sale of that crypto.

Collectors with dozens of trades generate hundreds of entries. That is not an exaggeration. Every NFT purchase with crypto is two transactions, and every fee is a third. Build the ledger as you go. See crypto record-keeping.

Frequently asked questions