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Crypto tax compliance and reporting for metaverse NFT income
This case study features a client who invested in metaverse activities, including lands and gaming ventures. Our client used the “AXS” token to buy NFTs with the idea of earning interest or rewards while the land was being held; as a result, there were numerous AXS token deposits made throughout the tax year.
An entirely player-owned real money economy exists on AXS. The ecosystem’s creators place more emphasis on expanding the player-to-player economy than on peddling copies or in-game goods. The Community Treasury, whose use will be decided by AXS holders, receives marketplace fees. The developers monetized this through their ownership of AXS tokens and AXS lands
How we helped:
The majority of the transactions, including the initial fiat deposits and AXS purchases, could be imported using a crypto tax-calculator software. However, the metaverse land acquisitions and income were contained in a wallet that was not compatible with our program. To incorporate the data from the AXS wallet and supply the transaction history needed to compute the tax calculations, we used a third-party solution like NFT bank. We made sure to categories transactions appropriately, reconcile the data, and make any necessary corrections.
Outcome:
HMRC accepted our tax return without any issue and our client was extremely grateful for all the help we provided to assist with this new and complex source of income.