This is just pure NFT theory – No Financial Advice NFA. We are just exploring some purely theoretical assumptions on How to Evade Tax with NFT.
Assumption 1: if you are lucky (or DYOR) as early adopter, you may have bought your NFTs at a low price and resold them at a higher price
Assumption 2: your NFTs are registered with Coinbase, who has all your information (bank number, passport number, address, tax identification number, etc.) beacause Coinbase is compliant with KYC: know your customers. They are required to report to the IRS all your transactions if the case occur.
Assumption 3: you create a decentralized wallet and make offers to your official NFT wallet holding the valuable NFTs. These offers would have to be lower than the price at the time they were procured, thus incurring a loss (resell value being lower then buying value).
Assumption 4: the losses resulting from your NFT transactions can now offset your profits on other activities. As a result you can reduce your taxable revenues.
But in reality, you are still the owner of the NFTs, which are now in a different wallet.
This is purely theoretical and bear risks at many stages. Indeed Tax evasion is against the law, AND you are putting at risk your earnings as crypto currencies and NFT prices fluctuate too.
Check our tutorial on how to