New service provides tax relief for people with worthless NFTs

A new service is providing tax write-offs for people who bought non-fungible tokens (NFTs) that are now essentially worthless, bringing relief to investors who would otherwise be unable to recoup their losses.

Unsellable, a new company started by investors and entrepreneurs Skyler Hallgren and Zach Miller, buys NFTs for a fraction of the original price. The key is that they give the sellers a receipt to prove their loss for tax purposes.

“While harvesting our tax losses from stocks in December 2021, we realized that our NFTs were a problem. While every investment class has its losers, many of the NFTs we invested in were not just large; they were now totally worthless … illiquid … unsellable,” says Unsellable’s website.

Unsalable claims it will buy NFT bought on the Ethereum blockchain for more than one cent. Unsalable purchases of NFTs, regardless of quality or rarity, for one penny in Ethereum then provide investors with a receipt that allows them to write off the difference between the purchase price and the sale price on the tax.

The site does not provide tax advice, but advises investors to work with a “crypto-competent CPA” to properly write off NFT losses. Investors can sell up to 500 NFTs in a single transaction and can complete multiple transactions on the platform. However, once an NFT is sold to Unsellable, it may not be sold back.

“We cannot guarantee that you will be able to buy back the NFT after selling, because that would prevent your sale from being counted as a tax deduction. We do this to ensure that your sale is legitimately a true ‘arm’s length transaction’ and to avoid any conflict of interest that would come from providing future financial benefits to the seller,” the website says.

The Guardian reports that Unsellable has purchased 5,000 NFTs and expects it to have 15,000 by the end of this month.

“We realized that it was a practical problem that locked up a lot of resources, and we could create a lot of value for people by offering to buy up their worthless NFTs and let them reap the losses,” Hallgren told the paper. Guardian.

“For some people, the amount they paid for NFTs is quite high and bought them for a penny, so the write-off they can take is quite high.”

Hallgren and Miller previously co-founded and then sold an emergency kit company.

Unsellable launches as crypto and NFTs enter an all-time low, driven in part by waning interest in space, growing skepticism about fraud, and the implosion of cryptocurrency exchange FTX.

Bitcoin is worth about a quarter of what it was a year ago. Both it and NFTs were affected by the Federal Reserve’s interest rate hikes, shocking investors who thought Bitcoin would be resistant to inflation. The downturn in assets in the space has been dubbed a “crypto winter” and has been ongoing for most of 2022.

Unsellable seems to want to capitalize on the decline, although it’s not clear how or if they intend to make money. Hallgren told Guardian they expect the NFTs “will likely continue to be worthless.” Unsellable’s website says they hope to create “the ultimate artifact from the early days of web3.”

Twitter users are skeptical of the business venture.

“So basically money laundering, and Ponzi,” one user wrote.

“Think the higher ups at @IRSnews might pass this on to someone,” another so. “I also think that these people need to seek legal counsel.”

Unsellable did not respond to a request for comment sent Thursday afternoon.

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