Non-fungible token (NFT) artist Jonathan Mann is the musician behind the "Song A Day" project, who turned his crypto tax experience into a cautionary musical piece.
In the new song, Mann recalls how he earned $3 million by selling his entire collection as NFTs, but with the collapse of the Terra ecosystem, that wealth turned to dust.
Mann sings in the song: "This is the story of how I made three million and lost it." At the same time, he lamented that the taxes levied by the IRS far exceeded his earnings over the past decade.
The musician owes $1.1 million in taxes.
Mann stated that it all began on January 1, 2022, when he sold 3,700 songs at $800 each, totaling $3 million—received in the form of Ethereum.
Mann and his wife had no plans, only hoping for the price of ETH to rise. However, when the value of ETH dropped in January 2022, they were unsure what to do, and the IRS also showed up.
He explained that the proceeds from the NFT sale are considered income, and therefore income tax must be paid, even if the value collapses later, the tax amount remains unchanged. To avoid selling at a loss, Mann used ETH as collateral to borrow through the lending protocol Aave. However, due to the crash of Terra triggering a market downturn, his 300 ETH vanished in an instant, "erasing a lifetime of effort," he lamented.
He and his accountant reviewed item by item, confirming that the owed amount was $1,095,171.79.
The rare Autoglyph NFT helped him out of trouble.
Facing the risk of property infringement and the loss of his wife's retirement account, Mann ultimately sold a rare Autoglyph NFT he had purchased early on.
Although a suitable buyer was not found on X, he eventually found an agent to sell for $1.1 million, allowing him to pay off his taxes. Due to the loss from the Aave loan, he did not have to pay capital gains tax on the sale of the Autoglyph. "It was both bitter and relieving when it was completed," he mentioned in the song.
Despite the ups and downs, Mann continues to compose daily and sell as NFTs, hoping to earn another $3 million in the future.
