How a $3 Million NFT Profit Turned into an Expensi
How a $3 Million NFT Profit Turned into an Expensive Tax Lesson
Jonathan Mann, the creator of the long-running project "Song A Day," turned his misfortune into a musical cautionary tale of crypto.
After making $3 million from selling thousands of his songs as NFTs in early 2022, Mann found himself facing a huge tax bill and a collapsing wallet.
Hoping for further gains, Mann and his wife decided to hold onto their earnings in Ethereum. But when the market turned and ETH began to crash, they were unprepared. Despite the declining value of their assets, U.S. tax law still treated the income at its original value, leaving them with a debt of over $1 million to the tax authorities.
In an attempt to postpone the sale at a loss, the pair used ETH as collateral for a loan from Aave. But when the Terra ecosystem collapsed, it triggered a wave of liquidations, including Mann’s. In an instant, 300 ETH disappeared, effectively erasing years of creative work.
Faced with the threat of losing his home and retirement savings, Mann dug into his digital vault and sold a rare Autoglyph NFT for $1.1 million—just enough to cover his tax obligations. Fortunately, previous losses meant he didn’t have to pay capital gains on the sale.
Despite the trials, Mann continues his daily songwriting project, still creates NFTs, and hopes for a second chance—this time with a clearer financial strategy.
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