The popularity of NFTs rose during the pandemic, but interest has since waned. Recently, the IRS issued preliminary guidance regarding the tax treatment of NFTs (non-fungible tokens) as collectibles and is soliciting comments until June 19, 2023, to determine further guidance. So, collectibles could include such items as rare comic book collections, vintage sports cars, baseball cards, or PEZ containers. However, taxpayers should be aware that certain coins and metals are excluded from the IRS definition of “collectible.” These include any coin issued under the laws of any state or any gold, silver, platinum, or palladium bullion of a certain fineness if a bank or approved nonbank trustee keeps physical possession of it.Īs noted above, the IRS has the authority to deem any tangible property not specifically listed as a collectible. Gold or silver, or gold and silver exchange-traded funds (ETFs) that are bought and sold, are considered collectible and taxed as such.
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Of course, in some cases, individual items from these collections may be quite valuable certain vintage PEZ dispensers or Cabbage Patch dolls, for instance. To serious art and antique collectors, the word “collectibles” often has a negative connotation, conjuring up visions of Hummel figurines, childhood baseball card collections, or your cousin’s long-forgotten high school troll collection.
But you need to be aware of the tax impact of selling collectibles. If you enjoy collecting antiques and collectibles or investing in fine art, wine, or vintage cars, there may be a time when you’re ready to cash in and reap the financial rewards.
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