- An “ape” with a blue bandanna sold for 2,691 ETH early Friday morning.
- Punk #4156 was acquired for 2,500 ETH in December 2021 before today’s auction.
Following the dip in the price of Ethereum, a rare CryptoPunks NFT sold for $3.3 million—a $7 million loss for the seller. However, if the previous owner plays their cards correctly during tax season, they might save millions of dollars due to that loss.
Might Be Loss Well Planned
An “ape” with a blue bandanna sold for 2,691 ETH early Friday morning, almost $3.3 million at the current price of $1,200 per ETH. Punk #4156’s unusual qualities include an “ape” look. Some Punks collectors thought the $3.3 million price was a huge discount offer for an NFT, a unique blockchain token that denotes ownership. However, it could look like a lot of money to an average person.
Punk #4156 was acquired for 2,500 ETH in December 2021 before today’s auction. That’s 191 ETH less than now, but it was worth $10.26 million in December when ETH was selling for more than three times what it is now. As a result, the seller today made just a little profit in Ethereum while suffering substantial losses in USD.
This may be a smart financial move if the prior owner of Punk #4156 declares a loss of $7 million on their taxes. While the IRS may consider the losses realized at the time of the NFT’s sale for tax reasons, the seller does not have to transfer that ETH into USD to write off the loss.
Traders use this strategy to lower their capital gains tax burden by intentionally losing money on paper. Further tax advantages might be gained via cutting capital gains income by $7 million, which could decrease the seller’s tax rate.
A noteworthy CryptoPunk sale has already occurred this week, though. On Tuesday, Punk #4464—another ape-style avatar—sold for $2.6 million, despite the prolonged cryptocurrency winter.
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