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NFT Investors Heap Into Unsellable to Offset Tax Losses

Several NFT investors have discovered a new way to recoup their losses on worthless digital assets by using Unsellable’s services. The platform has polarised the crypto community, which is wary of its activities.

Unsellable purchases NFTs that no one else will buy, allowing the previous owner to use them for tax loss harvesting. According to the website, its services include a “Instant Liquidity” platform and “Web3 junk removal.”

Since its inception, the platform has seen a surge in activity as numerous NFT investors liquidate their now-worthless digital collectibles. According to Etherscan data, it has over 15,000 digital assets in its collection at the time of writing.

Unsellable also has an OpenSea collection, which currently has 4.6k NFTs. Token 75 from Kleeee02 NFTs is the most valuable, and it last sold for 7 ETH in August 2021. Given the value of ETH at the time, the NFT would have cost the owner more than $21,000. On OpenSea, the best bid for the asset is currently 0.0043 WETH ($5.15).

Users can also sell assets in bulk using up to 1000 NFTs in a single transaction on the platform. One user sold several GoopGirls NFTs, while another sold WanderVerse and Derpy Birds. Unsellable currently only supports the Ethereum blockchain. Each transaction costs an average of 0.0033 ETH (approximately $4). Multiple NFTs in a single transaction cost less than 0.08 ETH (approximately $95) plus gas.

NFTs were recently classified as digital assets subject to capital gains tax by the US Internal Revenue Service (IRS). Investors must report to the authorities any digital asset sold to generate income under this classification.

Meanwhile, under US tax law, investors can offset capital losses with capital gains. “The more tax losses you write, the less you’ll owe from capital gains,” tweeted Twitter user Fash on December 31. This method allows you to pay less in taxes than you would if you only showed gains.”

Some members of the cryptocurrency community have criticised the venture. It is “completely illogical,” according to Robinhood’s Senior Director Jeffrey Lyon. If you want to liquidate an NFT, you take the highest available collection offer and get some real money (OK, WETH).”

Several other members of the community questioned whether this was legal, while others labelled it as tax evasion.

 

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.