How to Claim a Tax Loss on Worthless NFTs
Everyone with a wallet from the last cycle has them: collections that once had a floor and now have nothing. The instinct is to write them off. But 'it's worthless' is a conclusion, not evidence — and the difference matters if you ever have to defend the deduction.
A loss isn't real until you realize it
Price going to zero doesn't create a deductible loss by itself. You generally need a realization event: an actual disposition of the asset.
For NFTs, that usually means one of a few paths — sell it, abandon it, or make a worthlessness claim — each with different documentation needs.
Your realistic options
Sell it on the open market. If the collection still trades at all, a real sale to a real buyer is the cleanest, most defensible way to realize the loss — even at a tiny price.
Abandon or burn it. For collections with no market whatsoever, some holders send the NFT to a burn address to abandon it. Whether that alone supports the loss is a gray area, so treat it as a CPA conversation, not a certainty.
Claim it as worthless. When a project is truly dead, a worthlessness or abandonment claim may apply — but it lives or dies on the evidence you can produce.
The evidence that a market is dead
Think like a forensic accountant. For each collection, you want to document that there was no reasonable opportunity to sell. Strong signals include: zero listings sold on OpenSea in months or years, no bids on Blur, no activity on Magic Eden, a floor price that's effectively zero (or no floor because there are no listings), and zero trading volume.
Off-chain signals matter too: an abandoned Discord, a website that no longer resolves, developers who have disappeared, and token metadata that's broken or missing. Each one, on its own, is a data point. Together, they build the case.
Why we built the evidence report
Gathering that proof by hand, across dozens of dead collections, is miserable. Our tool assembles it automatically: for each collection you hold, it checks the market-death signals it can verify and compiles them into a documented dossier you can hand to your CPA.
We don't buy your NFTs or take custody of anything. We surface which positions look like worthlessness candidates and the evidence behind that call — you and your CPA decide how to act.
FAQ
Is sending an NFT to a burn address enough to claim the loss?
It may help establish abandonment, but it's a gray area on its own. Documentation of the collection's worthlessness is what strengthens the position. Ask your CPA.
What documentation should I keep?
Evidence that there was no market: zero recent sales, no bids, ~zero floor, dead project channels, and broken metadata — captured with dates.
Free 30-second wallet scan. No signup, no wallet connection.
Scan my wallet free →