How to file your Decentraland (MANA) taxes with Koinly
Decentraland is a virtual world built on the Ethereum blockchain and powered by MANA tokens, the native currency of this metaverse. Investors can buy, sell, and swap MANA tokens, as well as earn MANA tokens by selling or renting LAND, and by creating paid experiences in-game. But while the metaverse might be virtual, metaverse tax implications are very real. Whatever your MANA transactions, Koinly can help you calculate your taxes for MANA and thousands of other ERC-20 tokens and NFTs.
Sign up to Koinly and choose your country and currency
Connect Ethereum with Koinly to import all your trades safely and securely - including ERC-20 tokens like MANA
Koinly identifies the cost basis of your tokens and coins, as well as your taxable transactions
Koinly calculates any capital gains, losses, and income from your taxable transactions
Koinly generates your crypto tax report - ready to help you file with your tax office, or hand it over to your accountant.
How are MANA tokens taxed?
Unsurprisingly, tax offices haven't released any guidance yet on the potential tax implications of metaverses like Decentraland. But that doesn't mean your MANA won't be taxed. You'll need to look at the existing guidance from your tax office (you can find this in our crypto tax guides) and apply it to your MANA transactions. As an overview, generally speaking, two taxes may apply to your MANA transactions:
Capital Gains Tax: If you've sold, swapped, or spent MANA tokens and made a gain, you'll usually pay Capital Gains Tax on that gain.
Income Tax: When you earn new MANA tokens, for example, by earning MANA through renting land, this may be viewed as additional income and subject to Income Tax based on the fair market value of your MANA tokens in your fiat currency at the time you received them.
As well as this, if you're selling or trading NFTs in Decentraland - these also have tax implications. NFTs are generally viewed the same way as any other crypto asset, so selling or trading NFTs is a disposal of an asset, and any gain is subject to Capital Gains Tax. This said, if you're creating NFT assets and selling them for MANA regularly - like an artist selling paintings - this may potentially be viewed as income instead and subject to Income Tax.
Can the IRS track MANA?
The question on everyone's mind... can the IRS track crypto? And would they be interested in MANA tokens if they could? Let's break it down.
MANA is an ERC-20 token on the Ethereum blockchain. Ethereum, like most other blockchains, is a public ledger. That means anyone, including the IRS, can search for a given address to view the transactions made. So if the IRS can link your identity to a given wallet or transaction - then they may know about your investments.
As well as this, if you've traded or staked MANA using a centralized exchange, many of these exchanges issue 1099 forms to users with specific earnings - and whenever you receive a 1099 form, so does the IRS.
So the next question is, how interested is the IRS in the metaverse? While the IRS hasn't released any specific guidance on the tax implications of Decentraland and other metaverses, that doesn't mean they aren't paying attention. Especially when LAND in the metaverse was being sold for millions, like when the Metaverse Group purchased a LAND plot in Decentraland for $2.4 million, you can bet the IRS started taking an interest.
To avoid an unwelcome audit or crypto tax penalties, you should report your gains and income from crypto investments - including MANA - accurately.
How to get MANA tax documents
Most tax offices want you to report your gains, losses, and income from crypto investments, including MANA, in your annual tax return.
So you'll first need to calculate your gains, losses, and income from MANA, which starts with identifying each taxable transaction and the kind of tax that applies. Then you'll calculate a capital gain or loss for each disposal of MANA or the fair market value in your fiat currency for any MANA tokens considered additional income.
You have to do this not just for MANA, but for every crypto you've invested in - and it's time-consuming. This is why most investors use a crypto tax calculator like Koinly to save themselves hours of spreadsheets and manual calculations. Koinly can calculate your gains, losses, and income for more than 450,000 ERC-20 tokens - including MANA. You just need to connect Ethereum to Koinly, here's how.
How to import MANA transactions to Koinly automatically
To import your MANA transactions into Koinly, you’ll need to connect each Ethereum wallet you use to Koinly.
This is really easy to do, you just need your public address - but remember, you’ll need to do this for each Ethereum wallet you use to interact with MANA in order for Koinly to correctly identify your cost basis, transfers, sales, swaps, and more. If you're interacting with NFTs in Decentraland as well, Koinly also supports all ERC-721 tokens too, so your LAND NFTs are supported too - you just need to import your transactions the same way you would your MANA transactions.
You can find steps on how to connect a variety of popular wallets to Koinly on our integration pages, but here’s an example of how it generally works.
In your wallet
Open or log in to your wallet
Select Ethereum
Copy your public address
On Koinly
Sign up or log in to your Koinly account and go to the wallets page
Search for and select Ethereum
Give your wallet a name
Paste your public address
Important
Remember, you’ll need to do this for every wallet you use to interact with MANA tokens in order to calculate your crypto taxes correctly. If you've got Decentraland NFTs in different wallets, you'll need to sync these too.
It’s really helpful to name your wallets when you’re adding them to Koinly - you'll be able to find transactions more easily later on!
You may also be able to upload your transaction history to Koinly as a CSV file instead of connecting using your public address if you prefer, but this depends on the wallet you’re using. You can search for your wallet on our integration pages to find out more about how to get a CSV file from your wallet.
Your frequently asked questions
What is Decentraland?
Decentraland is a virtual browser-based world built on the Ethereum blockchain. Players can do pretty much anything they can dream of in Decentraland including creating and selling goods, building real estate, interacting with other players, participating in in-game experiences and more.
What are MANA tokens?
MANA is the native currency of Decentraland. Players can use MANA in-game, as well as use MANA to buy assets on the Decentraland marketplace. As well as this, players can earn MANA by selling NFTs, renting land, creating paid in-game experiences, and more.
How can I get MANA tokens?
What is the price of MANA?
Like all cryptocurrencies, MANA price varies depending on market conditions. MANA had a previous all-time high of $5.90 and a previous all-time low of $007883.
How many MANA tokens are there?
MANA has a circulating supply of 1.9 billion and a total supply of 2.1 billion.
What is the purpose of MANA tokens?
MANA tokens are what Decentraland runs on, so you can buy or sell Decentraland assets and experiences using MANA. As well as this, you can buy, sell and trade MANA tokens on centralized and decentralized exchanges like you could with any other token or cryptocurrency.
Is MANA a good investment?
Decentraland is a popular blockchain game, although, like all other crypto platforms, it hasn't been immune to the market conditions. This said, Decentraland still has many active daily users and MANA's daily trading volume remains high. As always, you should DYOR before investing in any cryptocurrency.
How can I store my MANA tokens?
MANA tokens can be stored in any hot or cold wallet that supports ERC-20 tokens, but it's important to store your tokens securely by following best crypto security practices.
What blockchain are MANA tokens on?
MANA is an ERC-20 token on the Ethereum blockchain.
Do I have to report my MANA tokens to the IRS?
Yes, you need to report any gains, losses, or income from crypto including MANA (or any NFTs) to the IRS as part of your annual tax return. If you don't, you'll face penalties and fines.
How are Decentraland NFTs taxed?
From a tax perspective, NFTs are mostly treated the same as any other crypto asset. This means when you dispose of an NFT by selling it or swapping it, you'll generally pay Capital Gains Tax on any gain. However, if you're creating and selling NFTs for MANA in the Decentraland marketplace, this could potentially be seen as additional income and subject to Income Tax upon receipt.
Does Koinly support Decentraland NFTs?
Decentraland NFTs are ERC-721 tokens, which Koinly supports. All you need to do is connect the wallet holding your Decentraland NFTs to Koinly using your public address and Koinly will automatically import all ERC-20, ERC-721, and ERC-1155 tokens for Ethereum and most other EVM-based blockchains. Find out more about how Koinly imports NFTs.
Can you make real money on Decentraland?
At its peak, LAND in Decentraland was being sold and rented for millions. As well as this, many creators had a lot of income from creating other in-game experiences or NFT assets. Although all earnings relating to Decentraland are in MANA, this is easily converted to fiat currencies using centralized exchanges.
What can you do in Decentraland?
Pretty much anything you can do in the real world you can do in Decentraland. Explore, socialize, go to gigs, rent real estate, gamble... the virtual world is your oyster.
Who is buying land in Decentraland?
Both individual investors and businesses set up shop in Decentraland including Samsung, UPS, Sotheby's, Metaverse Group, and JPMorgan.
