You don't need a cost basis until you sell the crypto. If you are just reporting income earned from interest, rewards, or staking, you would report it as miscellaneous income. To enter income here, follow these steps:
- With your return open, go to Federal > Income & Expenses
- Open the Less Common Income section and start or revisit the last entry, Miscellaneous Income, 1099-A, 1099-C.
- On the next screen, start/revisit the very last entry, Other Reportable Income, and answer Yes on the following screen.
- On the next screen, enter a description (for example, "Coinbase Rewards Payments") and then enter the total USD amount at the time of the reward, not its current value.
- You may repeat this for every currency for which you received interest or reward or combine them on a single line.
- Select Continue when finished.
The cost basis is the value you are reporting. For example, if you watched some videos on Coinbase to earn $6 worth of cryptocurrency, you would report $6 of income using the steps above. When you later sell that cryptocurrency, it is worth $10. The sale would be reported in the investment section of your return for the year that you sell it. Your cost basis for the sale would be $6, the income you reported when you got the underlying property. That is why you want to maintain a record, so you know the cost basis of the property when it comes time to sell it.
