No, your cost basis should not be zero given the facts you describe. The cost basis for the Bitcoin would be the price you charged for the services you offered. In other words, it appears you performed a service or some type of work and you were compensated for that service/work in Bitcoin. Thus, whatever you charged for the services/work you performed, that is your basis in the Bitcoin.
Regarding how to report this income, if you are not self-employed (meaning in business for yourself), then you could report the Bitcoin as other income. In TurboTax online,
- go to Income & Expenses,
- scroll down the page to the last item Less Common Income,
- select Miscellaneous income,
- then from the list select Other reportable income.
- you will have to enter the amount you earned plus a short description of the work you performed.
In TurboTax desktop,
- go to the Wages & Income section (you will need to click the Federal Taxes tab first).
- When you are in the Wages & Income section,
- scroll down to the bottom of the page where you will see Less Common Income,
- and at the bottom of that list, select Miscellaneous Income.
On the next page, select Other Income and respond accordingly to the questions. You will have to enter the amount you received, and a short description of the income.
When done, this income item will be on your Form 1040, line 8.
@wells_todd
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