It seems not all Bored Apes bring wealth and joy; some of them come with losses.
An interesting situation occured on Sunday, May 15th on the OpenSea marketplace, when NFT Bored Ape #6464 was sold for 200 USDC, ($200 U.S. dollars). Soon after, the very same NFT returned to the marketplace, but at the much higher price of 200 ETH ($407.8K USD).
The Bored Ape Yacht Club (BAYC) is one of the most famous and most expensive NFT collections, with the average floor price of its NFTs sitting at 101 ETH ($205K USD) at the time of writing.
Bored Ape #6462 ranks as the 209th most rare of a BAYC collection consisting of 10,000 NFTs. It features a mix of the rarest BAYC attributes, including pizza, a police motorcycle helmet, and a bone necklace.
Last May, the NFT was sold for no less than 2.4 ETH ($7.8K USD) just days after it was minted.
It is for these reasons that the unusually low price for an Ape with such a rare background came as quite a surprise to the crypto community. Some believe the transaction to have been a fatal mistake in which the seller accepted USDC instead of ETH. Meanwhile, others suspected that the low-value trade was not accidental, and was in fact carried out to evade taxes.
Tax evasion 101. Both accounts have nothing in their wallets, offers accepted Within 3 mins of listing
— Jonathan (@Jon_Metavest) May 15, 2022
All Bored Ape NFTs are minted on the Ethereum blockchain, which is a public and immutable network where an asset’s entire transaction history can be seen.
Thus, by following the OpenSea records, it can be seen that Bored Ape #6462 had previously been sold twice, for 2.14 ETH and 2.4 ETH respectively. Both transactions were made in May 2021, since which time the NFT has migrated between different NFT wallets, but with no money involved.
However, the most recent of these wallet transfers happened on Sunday, May 15th. Mere seconds after the Bored Ape was received, it was sold for a scandalous 200 USDC. It seems that the mysterious bargain buyer registered on OpenSea just days before the sale happened. The unusual activity of both the former and current NFT owners has raised suspicions of an attempt at tax evasion.
The IRS Remains Keen to Collect Taxes from NFTs
In 2021 the NFT market burst onto the scene as an extremely trendy market worth $44 billion. In monitoring this, the United States Internal Revenue Service (IRS) cautioned that NFTs may become vehicles for tax evasion, and thus settled upon rules that every NFT collector must report their NFT dealings for tax reasons.
The tax experts agreed that profit generated from each and every NFT sold on the open market should be considered ordinary income, and be accordingly taxed at the ordinary income tax rate, which fluctuates between 10% and 37%. The same rate applies to both fiat and digital currencies.