topic Re: How do I classify a wrapped crypto token? in Get your taxes done using TurboTax

How do I classify a wrapped crypto token?

RGQ2021 — Tue, 14 Mar 2023 01:20:13 GMT

TurboTax needs me to classify my wrapped Eth token, but I don't see anyone of the choices listed available for me to select. Here are the choices: Buy, income, interest, deposit, mining, airdrop, fork, stake, redeem, and reward. How do I classify it? Can someone please help me?

Re: How do I classify a wrapped crypto token?

JamesG1 — Tue, 14 Mar 2023 12:06:57 GMT

Have you been given access to any IRS forms, income reports or downloads that report income / expense activity for 2022?

If so, what was the nature of the activity?

@RGQ2021

Re: How do I classify a wrapped crypto token?

RGQ2021 — Tue, 14 Mar 2023 19:15:24 GMT

No, I didn't get a tax form because the wrapped token was a Coinbase Ethereum 2. This is one of the items that I need to classify in TurboTax's crypto income section because it shows as "Other income", but it's not. Here is why: In order to stake in Eth 2, It was an even 1:1 swap from Eth 1. Since there was no other option to classify this token, should I ignore it?

Re: How do I classify a wrapped crypto token?

DaveF1006 — Wed, 15 Mar 2023 02:37:05 GMT

Wrapped Crypto is like any other crypto currency. If you did a swap, it is reported as a capital gain or loss. To report, go to;

Federal>wages and income
Go to investment come>stock, bonds, other
Proceed through the interview until you get to a page that is entitled Tell us about this sale
Under description type in Crypto Swap from Eth 1 to Eth 2
Date sold will be the date of the swap and the relinquish the old token in exchange for the new wrapped crypto.
Date acquired will be the date you received the old crypto
Sale proceeds will be the value of the new wrapped crypto
Cost basis is the value of the old crypto
Holding period is determined by the dates sold vs the dates acquired. If you own the old crypto longer than one year, then this is long -term. If you are using Turbo Tax online, you would probably use long-term uncovered because more than likely, the basis wasn't reported to the IRS prior to now.

if this is located as other income, you need to remove this from your return. If you reported it in a section, go to that section and remove it. Without looking at your return, it is difficult for me to tell you how to remove it.

Reach out to us if you need further assistance.

{Edited 03/02/23} 1:36 PM PST} @RGQ20

Re: How do I classify a wrapped crypto token?

RGQ2021 — Wed, 15 Mar 2023 19:20:50 GMT

Unfortunately, swap is not one of the options for me to select under Edit transaction in the TurboxTax Deluxe edition. Also, it won't let me ignore the transaction either. Here are the 10 actions to select from the drop-down box: Buy, income, interest, deposit, mining, airdrop, fork, stake, redeem, and reward.

Thank you very much for helping me.

Re: How do I classify a wrapped crypto token?

DianeW777 — Wed, 15 Mar 2023 20:13:11 GMT

It's not clear where you are seeing these options in TurboTax. You can send us a “diagnostic” file that has your “numbers” but not your personal information.  If you would like to do this, here are the instructions:

TurboTax Online:

Go to the black panel on the left side of your program and select Tax Tools.

Then select Tools below Tax Tools.
A window will pop up which says Tools Center.
On this screen, select Share my file with Agent.
You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.

TurboTax CD/Download:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

Click on Online in the top left menu of TurboTax CD/Download for Windows
Select 'Send Tax File to Agent'
Write down or send an image of your token number then place in this issue.
We can then review your exact scenario for a solution.
Please also tell us any states included in the return.

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

Re: How do I classify a wrapped crypto token?

RGQ2021 — Mon, 20 Mar 2023 23:16:44 GMT

Some or maybe none of the TurboTax agents have the time to review all of my crypto transactions. Perhaps, if I pay for them to do it for me. My crypto transactions are in the thousands. The problem is really that the crypto exchanges should provide us with prepared tax forms instead that we have to figure out the mess.