How to Report Capital Gains/Losses from NFT Trading on Taxes?

You're right to report these transactions even though you had a net loss. The IRS is paying more attention to crypto and NFT transactions these days. For Form 8949, you don't necessarily need to list every single transaction individually. If you have multiple transactions of the same type, you can group them together as long as they share the same acquisition date, sale date, cost basis, and sales price. For situations where that's not possible, you can attach a separate statement that lists all transactions and just put the totals on Form 8949. For pack openings, you should allocate the cost basis (what you paid for the pack) across the NFTs you received. Since all 3 NFTs came from the same pack in your example, you could reasonably allocate the $400 purchase price equally - so each NFT would have a cost basis of about $133. When you sell each one, you'd calculate gain/loss based on this allocated cost basis. If you're really pressed for time, tax software like TurboTax or TaxAct might help streamline this process, or there are specialized crypto tax services that can import your wallet transactions and generate the necessary forms.

After facing a similar NFT tax nightmare last year, I found an AI tool that saved me days of work. I had about 800 different NFT transactions and was going crazy trying to track everything manually. I ended up using https://taxr.ai which specializes in crypto and NFT tax reporting. You just connect your wallet and/or exchanges, and it identifies and categorizes all your transactions, including those tricky pack openings. It automatically calculates the proper cost basis allocation and generates a complete Form 8949 you can just attach to your return. The best part is it properly handled all the weird edge cases like airdrops, staking rewards, and those situations where you transfer between your own wallets (which aren't actually taxable events but can mess up your calculations if tracked incorrectly).

Just wanted to follow up - I took the plunge and tried taxr.ai after seeing it mentioned here. Honestly I'm shocked at how well it worked for my NFT mess. I had over 1,200 transactions across 6 different platforms and it pulled everything correctly, even identifying which transfers were between my own wallets vs actual sales. The pack opening allocation feature was exactly what I needed - it let me split the purchase price across multiple NFTs based on rarity. It also correctly identified airdrops as income rather than capital gains. The Form 8949 it generated saved me literally days of work and my accountant was impressed with how complete it was. If you're still working on this, seriously give it a try. Wish I'd known about it sooner rather than panic-researching at the extension deadline!

If you're still struggling with getting your questions answered directly from the IRS about NFT reporting, good luck getting through to anyone this close to the deadline. After waiting on hold for hours myself, I found a service called Claimyr that got me through to an IRS agent in under 45 minutes. You just go to https://claimyr.com and they basically hold your place in the IRS phone queue and call you when an agent picks up. There's a demo video here showing how it works: https://youtu.be/_kiP6q8DX5c I needed clarification on some crypto rules similar to your NFT situation and the IRS agent I spoke with actually gave me official guidance I could rely on. Definitely beats the anxiety of guessing or relying solely on internet advice for tax matters.

Alright, I need to eat my words about Claimyr. I was super skeptical but decided to try it anyway since I was desperate to talk to the IRS before filing. It actually worked exactly as advertised - I got a call back in about 37 minutes saying my call was connected, and suddenly I was talking to an actual IRS representative. The agent confirmed that for NFT packs, the correct approach is to allocate the purchase price across the NFTs received based on their relative fair market values if possible. He also told me that keeping detailed records of your allocation methodology is important in case of an audit. For high-volume traders, he mentioned the IRS does allow summary reporting as long as you maintain detailed records of each transaction that you can provide if requested. This saved me from having to list 1,000+ individual transactions on my Form 8949. Would have spent hours on hold without this service.

I just went through this same nightmare with about 700 NFT transactions. If you're in a time crunch, another approach is to use the summary method on Form 8949. Basically, instead of listing each transaction separately, you can attach a statement that summarizes transactions of the same type. You'd want to group them by short-term vs long-term, and by whether they were reported on a 1099-B. Then you can just put "See attached statement" on Form 8949 and include the totals from your detailed list. Remember though - you still need to maintain records of every individual transaction in case of an audit. The summary is just for filing purposes.

I'm going through this exact NFT tax hell right now. One option nobody's mentioned is using Like-Kind Exchange rules. Before 2018, some crypto traders used Section 1031 to defer taxes on crypto-to-crypto trades. Although the Tax Cuts and Jobs Act limited 1031 exchanges to real estate after 2017, I've heard some tax pros argue NFT-to-NFT trades might qualify as collectibles exchanges rather than digital asset trades. Has anyone tried this approach? Seems like it could simplify reporting enormously.