rare cryptopunks The NFT just sold for $3.3 million—a $7 million loss for the seller when you . keeping in mind the falling price of Ethereum,
But when tax season arrives, that loss could save the former owner millions if they play their cards right.
On Friday morning, Punk #4156—whose rare features include an “ape” appearance and a blue bandana—sold for 2,691 ETH, with ETH of around $3.3 million currently trading for around $1,200.
Whereas, to the average person, $3.3 million may sound like a wild amount of money for someone. NFT—a unique blockchain token which signifies ownership—it was actually considered a lowball proposition by some punk collectors.
“Easily worth 25 million in my eyes,” tweeted borovik.ethJoe owns Punk #3938.
Tank, owner of Punk #4227, wrote on a Twitter account, “$3.2 million is a joke for that monkey, but it might be tempting for Holder to admit it.” Post before accepting the bid.
Prior to today’s sale, Punk #4156 was bought back in December 2021 for 2,500 ETH. he is 191 ETH Less Than Today, But Worth $10.26 million in December, as ETH was trading at more than three times today’s price. This means that today’s sellers made relatively little profit in Ethereum but made huge losses in terms of USD value.
So why did the owner sell for a loss of $7 million? it might have something to do with tax loss harvesting,
If the former owner of Punk #4156 writes off the sale as a $7 million loss on their taxes, it could be a financially beneficial move. Although, for tax purposes, the IRS may consider losses that occurred at the time of the sale of the NFT, the seller does not need to convert that ETH to USD to write off the loss.
This type of intentional loss, on paper, is a common practice that traders employ. reduce their capital gains liability, It’s also possible that reducing capital gains income by $7 million could lower the seller’s tax rate even further, leading to further tax benefits.
A Doodle NFT holder “It’s really smart for tax loss harvesting if he is sure that he won’t make a positive return on that investment anytime soon,” a Doodle NFT holder tweeted today Punk sales.
While the seller may be in on the good game of tax loss harvesting, what about the buyer? $3.3 million inches This Economy?
Janik.sol, which claims to have bought out Punk #4156, sees the purchase as a gateway to “generational wealth”.
I bought BAYC at $400k each and kept them up to $100k.
I need a punk to mix my life savings into generational money
Why did I buy them?
Cause I know badasses can be worth something
I’ll be here when the bear is over
— Janik.sol (@Jan1kkk) 15 July 2022
“I need a punk to put my life savings into generational money. Why did I buy them? Because I know punks can be worth something. I’ll be here when the bears are over,” Janik.sol tweeted.
However, this is not the first notable crypto sale this week. NFT sales have been on the rise lately, as punk #4464—another monkey-style avatar—sold out $2.6 million on Tuesday despite the ongoing crypto winter.
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