Has anyone considered what the tax ramifications are going to be when you buy a non-fungible token (NFT) in the US? For example, you buy a crypto Kitty for ETH. In a program like
https://bitcoin.tax/ you can record that transaction in the "spending" section. But you didn't spend the ETH on a goods (like food or drinks), you exchanged it for an asset which may or may not increase in value over time. I don't know if this topic has been considered yet as NFT's have just started taking off this year.
Thank you for your time.
I'm not familiar with the bitcoin.tax software, but a digital collectible should probably be treated the same as cryptocurrency -- as property -- for tax purposes. It's not real property so like-kind exchanges don't apply, and they obviously can't be treated as currencies.
You would treat the sale of ETH for crypto-kitty as selling ETH for USD, then separately buying the crypto-kitty with USD. It's the same tax treatment as bitcoin-altcoin trading.