A new service offers tax write-offs for people who bought non-fungible tokens (NFTs) that are now essentially worthless, offering relief to investors who otherwise would not have been able to recoup their losses.
Unsellable, a new company founded by investors and entrepreneurs Skyler Hallgren and Zach Mueller, buys NFTs for a fraction of the original price. The key is that they issue a receipt to the sellers to prove their losses for tax purposes.
“As we reaped our tax losses from stocks in December 2021, we realized our NFTs were a problem. While every asset class has its losers, many of the NFTs we’ve invested in have not only been down heavily; They were now utterly worthless…illiquid…unsellable,” the Unsellable website reads.
Unsellable claims it will buy every NFT bought on the Ethereum blockchain for more than a penny. Unsellable, regardless of quality or rarity, the NFT purchases for a penny in Ethereum, then issues investors a receipt that allows them to deduct the difference between the purchase and sale price for tax purposes.
The site doesn’t offer tax advice, but recommends investors work with a “crypto-savvy CPA” to properly write off their NFT losses. Investors can sell up to 500 NFTs in a single transaction and complete multiple transactions on the platform. However, once an NFT has been sold to Unsellable, it may not sell it back.
“We cannot guarantee that you will be able to repurchase your NFT after the sale as this would prevent your sale from qualifying for a tax deduction. We do this to ensure that your sale is lawfully a genuine arm’s length transaction and to avoid conflicts of interest that would arise from providing future commercial benefits to the seller,” the website reads.
That Guardian reports that Unsellable has acquired 5,000 NFTs and expects to have 15,000 by the end of this month.
“We realized that there is a practical problem that is blocking a lot of resources, and we could create a lot of value for people by offering to buy up their worthless NFTs and allowing them to reap the losses,” Hallgren said Guardian.
“For some people, the amount they paid for NFTs is pretty big and they bought them for a penny, so the depreciation they can take is pretty big.”
Hallgren and Miller previously co-founded and then sold an emergency preparedness kits company.
Unsellable launches as crypto and NFTs hit historic lows, due in part to waning interest in the space, growing skepticism about scams, and the implosion of cryptocurrency exchange FTX.
Bitcoin is worth about a quarter of what it was a year ago. Both they and the NFTs were affected by the Federal Reserve’s rate hikes, which shocked investors who thought Bitcoin was inflation-resistant. Dubbed “crypto winter,” the downturn in space assets lasted for most of 2022.
Unsellable appear to be looking to capitalize on the downturn, though it’s not clear how or if they intend to turn a profit. Hallgren said that Guardian They anticipate that the NFTs “will likely continue to be worthless.” Unsellable’s website says they hope to create “the ultimate artifact of web3’s early days”.
Twitter users are skeptical about the business venture.
“So basically money laundering and Ponzi,” one user wrote.
“I think the higher ups at @IRSnews might pass this on to someone,” another said. “I also think these people need legal advice.”
Unsellable did not respond to a request for comment sent Thursday afternoon.
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*Initial publication: December 29, 2022 at 2:30 p.m. CST
Jacob Seitz is a freelance journalist originally from Columbus, Ohio, interested in the intersection of culture and politics.
https://www.dailydot.com/debug/unsellable-buys-worthless-nfts-taxes/ New service offers tax breaks for people with worthless NFTs