Tax Notes consulted Kostelanetz associate Garrett L. Brodeur for comments on the tax implications of the new Starbucks rewards program called Odyssey, which utilizes non-fungible tokens (NFTs). The use of NFTs introduces a variety of tax questions, which may remain unanswered until the IRS issues additional guidance.
The article reads, “Garrett L. Brodeur of Kostelanetz LLP said new marketplaces are bringing taxpayers into contact with NFTs in new ways, and that means taxpayers will need even more new guidance. Without more guidance, the taxation of NFTs and the benefits that accompany the tokens is uncertain, Brodeur noted. There are already lots of factual variations and a multifaceted environment, and having a rewards program run through NFTs adds another layer of complexity onto the system, he said.”
“There are holes in the IRS’s digital asset guidance and the Tax Court’s rewards program case law, such as Shankar v. Commissioner, 143 T.C. 140 (2014), according to Brodeur. Taxpayers and their representatives need more guidance to close those holes with answered questions, he said.”
“Brodeur also suggested that Starbucks will face the virtual currency broker reporting requirements. It’s one thing for smaller rewards like free coffee, but something like the trip to Costa Rica comes with much larger values and much larger tax consequences, he said.”
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