Minimizing capital gains taxes on cryptocurrency and NFTs requires smart tax planning. While you can’t completely avoid taxes on realized gains, you can use strategies to reduce and defer them.
First, understand how short-term and long-term gains are taxed. If you hold an NFT for less than a year, it’s taxed as ordinary income, which can be much higher than the long-term capital gains tax rate. Waiting at least a year before selling can significantly lower your tax liability. Another strategy is using a Deferred Sales Trust (DST). This allows you to transfer your NFT to a trust before selling. The trust then sells the asset and reinvests the proceeds, distributing payments to you over time, helping defer capital gains taxes. Since IRS rules around NFTs and trusts are evolving, working with a tax professional experienced in DSTs and crypto taxation ensures compliance and maximizes savings. Missteps could trigger audits, immediate tax liabilities, and penalties.
source: https://capitalgainstaxsolutions.com/your-ultimate-guide-to-nfts-and-capital-gains-taxes/
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