STEP LA: NFTs: Protection for digital artwork leads to tax and planning complexities

Non-fungible tokens (NFT) are cryptographic assets on a blockchain with unique identifying metadata and codes. Unlike cryptocurrencies such bitcoin, which are fungible or interchangeable, each NFT is different, or non-fungible. NFTs are being used to identify and authenticate digital artworks, adding values and protecting the creators and owners. But as a new technology, existing legal structures do not always apply in a direct and consistent way.

The taxation of NFT is currently unclear but does rely on the limited guidance provided by the IRS and Treasury for digital currencies as well as traditional tax principles. Planning for estate purposes can also be complex. This program will define NFTs, explaining their identifying characteristics, and will provide tax guidance along with other planning insight.

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