Jonathan Mann, renowned for his "Song A Day" project, encountered substantial financial challenges following the sale of his music catalog as non-fungible tokens (NFTs). In January 2022, Mann sold approximately 3,700 songs for a total of $3 million, receiving payment in Ethereum (ETH). Opting to retain the ETH, he anticipated a rise in its value. However, the cryptocurrency's price declined shortly after, diminishing the dollar value of his holdings.

The U.S. Internal Revenue Service (IRS) classifies cryptocurrency income based on its fair market value at the time of receipt, regardless of subsequent market fluctuations. Consequently, Mann incurred a tax liability of approximately $1.1 million, calculated on the initial $3 million valuation. To address this obligation, he secured a loan of $400,000 through the Aave lending platform, using 518 ETH as collateral. The subsequent collapse of the Terra ecosystem in May 2022 further depreciated his collateral's value, leading to liquidation and exacerbating his financial losses. 

Facing potential asset seizure due to unpaid taxes, Mann sold a rare Autoglyph NFT for $1.1 million to settle his IRS debt. Reflecting on his experience, he advises NFT creators to promptly convert cryptocurrency earnings into fiat currency to mitigate tax-related risks. Mann continues his "Song A Day" endeavor, underscoring the importance of financial…