Non-fungible token (NFT) artist Jonathan Mann, the musician behind the “Song A Day” project, has become a crypto tax difficulty in a cautionary musical tale.
On a new track shared with X, Mann Recorded How he made $ 3 million selling his entire back catalog as NFTs, only to see it disappear as the market crashed during the fall of the Terra ecosystem.
“This is the story of how I made three million dollars and lost it,” Mann sang. “And how I owe the IRS a lot more money than I did in 10 past years.”
Musician owes $ 1.1 million in NFT sales taxes
Mann said it all started on January 1, 2022, when he sold 3,700 songs to $ 800 each, netting him nearly $ 3 million – all in Ether (Eth).
Glad but not ready, Mann and his wife decided to handle the crypto, hoping that ETH prices would increase. “We have no plans,” Mann admitted to the song.
Things turn away when the ETH value refuses in January 2022, and the couple is unsure about how much to sell or when. To add to their problems, the US Internal Revenue Service (IRS) came to their door.
As Mann explained in the song, his revenues from the sale of NFTs are taxed as income. This means that the tax is based on the amount of ETH when received, regardless of the amount of crypto ownership. As a result, even though their $ 3 million in ETH dropped the price, their tax tax remained the same.
To avoid selling their crypto to the loss, Mann said they took a loan through the Lending Protocol Aave, using some ETH as collateral. But the disaster struck as the market began to crash, encouraged by the Terra’s collapse.
The incident contacted a cascade of fluids throughout the ecosystem, which included Mann’s loan. In a flash, 300 ETH was lost. “A work life has been erased for a moment,” he grieved.
Schrushing to find a way, Mann spent months pleading transactions with his accountant to determine how much they owed – they found $ 1,095,171.79.
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Rare AutoglyPh NFT saves the day
With the threat of potential responsibilities in their home and the dangers of losing his wife’s retirement account, Mann turned to one last option: selling a rare autoglyph NFT he bought back in the early days of Crypto.
The musician said he attempted to sell NFT by X but did not get a good acceptance. However, he found a broker with a client who offered $ 1.1 million for NFT. Mann said he accepted the deal to pay for IRS taxes.
Due to the losses achieved in the AAVE loan, Mann does not owe a debt for the sale of autoglyph. “It felt so much bittersweet to do,” he sang at the end.
Despite the hardships, Mann continues to write daily songs and sells them as NFTs, he still hopes one day he’ll get another $ 3 million.
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