JAKARTA - Jonathan Mann, the musician behind the 'Song A Day' project, experienced a bitter story after making around US$3 million (Rp48.8 billion) from selling the entire catalog of his songs as NFT. However, the money disappeared after the cryptocurrency market collapsed, especially when the Terra ecosystem collapsed. Now Mann is turning its bitter experience into an honest song about the crypto tax struggle.
On January 1, 2022, Mann sold 3,700 songs at a price of 800 US dollars per song in the form of Ether (ETH), bringing the total to around 3 million US dollars. Very excited, Mann and his wife chose to keep the ETH in the hope that prices would rise. However, they do not have a mature plan.
When the ETH value began to fall in January 2022, the couple were confused about when to sell. The problem grew when the United States Internal Revenue Service (IRS) collected taxes based on the value of ETH when they received payments, not based on the value that fell later. That is, even though their ETH value falls, the tax to pay remains high.
To avoid selling assets when prices fell, Mann took a loan using Aave's loan protocol with ETH as collateral. Unfortunately, the market crash due to Terra's collapse triggered massive liquidation, including Mann's loan, and in an instant 300 of his ETH was lost. Mann called it a "long life of work lost in an instant."
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After months of counting and dealing with accountants, Mann learned that the total tax to pay was around $1.1 million. With the risk of the house being confiscated and his wife's pension fund in danger, Mann tried the last option: selling a rare NFT called Autoglyph which he bought from the start of the crypto world.
Although efforts to sell through platform X were less successful, Mann finally found the broker who managed to sell the NFT for USD 1.1 million, enough to pay the IRS tax. Due to the loss from Aave's loan, Mann was not taxed capital gains on this Autoglyph sale.
Mann ended the song in mixed tones, feeling relieved but also bitter to have gone through all that. Even so, he still writes songs every day and sells them as NFT in the hope of returning to make millions of dollars.
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