topic How do I report a crypto airdrop? in Tax topics https://ttlc.intuit.com/community/tax-topics/help/how-do-i-report-a-crypto-airdrop/01/1638075#M7275 <P>Cryptocurrency airdrops are (usually) free distributions of coins or tokens into multiple wallet addresses to promote and drive adoption of a new virtual currency.</P> <P>Recently, the IRS ruled that airdrops, along with promos and staking rewards, only become taxable once the taxpayer <EM>"acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency."</EM> Airdropped currency not yet usable or accessible would therefore not be taxable until the taxpayer is able to exercise control over it. <A href="https://www.irs.gov/pub/irs-drop/rr-19-24.pdf" target="_blank" rel="nofollow">More info</A></P> <H3> <A data-toggle="collapse" href="#collapse1" target="_blank" rel="nofollow"><I class="on-right icon-caret-right"></I>Step 1 - Convert to USD</A></H3> <DIV id="collapse1" class="section collapse"> <P>First, convert the value of your airdrops, promos, and rewards to US dollars (USD) if the issuer or exchange hasn't already done this for you.</P> <P>You can use an online cryptocurrency converter, such as <A href="https://coinmarketcap.com/converter/" target="_blank" rel="nofollow">CoinMarketCap</A>, to determine the USD value based on either the historical close price or the average price (doesn't matter which one you choose, as long as you stay consistent throughout your calculations.) Be sure to keep notes of your calculations with your tax records in case it's ever questioned.</P> <P><STRONG>Example:</STRONG> Let's say you received .00017762 BTC as a promo on&nbsp;December 9, 2020 and you were able to immediately exercise control over it (sell, trade, exchange, etc.).</P> <OL> <LI>On that day, CoinMarketCap reports that the BTC close price was $7,400.90.</LI> <LI>Multiply the quantity received by the close price (.00017762 × $7,400.90 = $1.31 rounded).</LI> <LI>Repeat this calculation for all airdrops, promos, and staking rewards received in 2020, based on the close price of the day you were able to exercise control over them.</LI> <LI>Add them together for one total sum, and move on to the next section.</LI> </OL> </DIV> <H3> <A data-toggle="collapse" href="#collapse2" target="_blank" rel="nofollow"><I class="on-right icon-caret-right"></I>Step 2 - Enter in TurboTax</A></H3> <DIV id="collapse2" class="section collapse"> <P>Once you have the USD values, here's how to enter them into TurboTax:</P> <OL> <LI>With your return open, go to <STRONG>Federal</STRONG>&nbsp;(or <STRONG>Federal Taxes</STRONG>) &gt; <STRONG>Wages &amp; Income</STRONG> (or <STRONG>Personal</STRONG> if using Self-Employed or Home &amp; Business).</LI> <LI>Open the <STRONG>Less Common Income</STRONG> section and start or revisit the last entry,&nbsp;<STRONG>Miscellaneous Income, 1099-A, 1099-C</STRONG>.</LI> <LI>On the next screen, start/revisit the very last entry, <STRONG>Other Reportable Income</STRONG>,<STRONG>&nbsp;</STRONG>and answer <STRONG>Yes</STRONG> on the following screen.</LI> <LI>On the next screen, enter a description (for example, "crypto airdrop") and then enter the total USD amount.</LI> <LI>Select <STRONG>Continue</STRONG> when finished.</LI> </OL> </DIV> <DIV class="ISH_suggestedInformation"> <H2>Related Information:</H2> <UL> <LI> <A href="https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-form-1099-ltc/00/25901" target="_blank">Where do I enter Form 1099-LTC?</A> </LI> <LI> <A href="https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-a-1099-q/00/26766" target="_blank">Where do I enter a 1099-Q?</A> </LI> <LI> <A href="https://ttlc.intuit.com/community/investments/help/what-is-restricted-stock-and-how-is-it-taxed/00/26037" target="_blank">What is restricted stock and how is it taxed?</A> </LI> <LI> <A href="https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-form-1098-t/00/26336" target="_blank">Where do I enter Form 1098-T?</A> </LI> </UL> </DIV> Mon, 08 Mar 2021 12:37:30 GMT TurboTax Help 2021-03-08T12:37:30Z How do I report a crypto airdrop? https://ttlc.intuit.com/community/tax-topics/help/how-do-i-report-a-crypto-airdrop/01/1638075#M7275 Cryptocurrency airdrops are (usually) free distributions of coins or tokens into multiple wallet addresses to promote and drive adoption of a new virtual currency. Recently, the IRS ruled that airdrops, along with promos and staking rewards, only become taxable once the taxpayer "acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency." Airdropped currency not yet usable or accessible would therefore not be taxable until the taxpayer is able to exercise control over it. More info Step 1 - Convert to USD First, convert the value of your airdrops, promos, and rewards to US dollars (USD) if the issuer or exchange hasn't already done this for you. You can use an online cryptocurrency converter, such as CoinMarketCap, to determine the USD value based on either the historical close price or the average price (doesn't matter which one you choose, as long as you stay consistent throughout your calculations.) Be sure to keep notes of your calculations with your tax records in case it's ever questioned. Example: Let's say you received .00017762 BTC as a promo on&nbsp;December 9, 2020 and you were able to immediately exercise control over it (sell, trade, exchange, etc.). On that day, CoinMarketCap reports that the BTC close price was $7,400.90. Multiply t... Mon, 08 Mar 2021 12:37:30 GMT https://ttlc.intuit.com/community/tax-topics/help/how-do-i-report-a-crypto-airdrop/01/1638075#M7275 TurboTax Help 2021-03-08T12:37:30Z
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topic How do I report a crypto airdrop? in Tax topics
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https://ttlc.intuit.com/community/tax-topics/help/how-do-i-report-a-crypto-airdrop/01/1638075#M7275
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<P>Cryptocurrency airdrops are (usually) free distributions of coins or tokens into multiple wallet addresses to promote and drive adoption of a new virtual currency.</P> <P>Recently, the IRS ruled that airdrops, along with promos and staking rewards, only become taxable once the taxpayer <EM>"acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency."</EM> Airdropped currency not yet usable or accessible would therefore not be taxable until the taxpayer is able to exercise control over it. <A href="https://www.irs.gov/pub/irs-drop/rr-19-24.pdf" target="_blank" rel="nofollow">More info</A></P> <H3> <A data-toggle="collapse" href="#collapse1" target="_blank" rel="nofollow"><I class="on-right icon-caret-right"></I>Step 1 - Convert to USD</A></H3> <DIV id="collapse1" class="section collapse"> <P>First, convert the value of your airdrops, promos, and rewards to US dollars (USD) if the issuer or exchange hasn't already done this for you.</P> <P>You can use an online cryptocurrency converter, such as <A href="https://coinmarketcap.com/converter/" target="_blank" rel="nofollow">CoinMarketCap</A>, to determine the USD value based on either the historical close price or the average price (doesn't matter which one you choose, as long as you stay consistent throughout your calculations.) Be sure to keep notes of your calculations with your tax records in case it's ever questioned.</P> <P><STRONG>Example:</STRONG> Let's say you received .00017762 BTC as a promo on&nbsp;December 9, 2020 and you were able to immediately exercise control over it (sell, trade, exchange, etc.).</P> <OL> <LI>On that day, CoinMarketCap reports that the BTC close price was $7,400.90.</LI> <LI>Multiply the quantity received by the close price (.00017762 × $7,400.90 = $1.31 rounded).</LI> <LI>Repeat this calculation for all airdrops, promos, and staking rewards received in 2020, based on the close price of the day you were able to exercise control over them.</LI> <LI>Add them together for one total sum, and move on to the next section.</LI> </OL> </DIV> <H3> <A data-toggle="collapse" href="#collapse2" target="_blank" rel="nofollow"><I class="on-right icon-caret-right"></I>Step 2 - Enter in TurboTax</A></H3> <DIV id="collapse2" class="section collapse"> <P>Once you have the USD values, here's how to enter them into TurboTax:</P> <OL> <LI>With your return open, go to <STRONG>Federal</STRONG>&nbsp;(or <STRONG>Federal Taxes</STRONG>) &gt; <STRONG>Wages &amp; Income</STRONG> (or <STRONG>Personal</STRONG> if using Self-Employed or Home &amp; Business).</LI> <LI>Open the <STRONG>Less Common Income</STRONG> section and start or revisit the last entry,&nbsp;<STRONG>Miscellaneous Income, 1099-A, 1099-C</STRONG>.</LI> <LI>On the next screen, start/revisit the very last entry, <STRONG>Other Reportable Income</STRONG>,<STRONG>&nbsp;</STRONG>and answer <STRONG>Yes</STRONG> on the following screen.</LI> <LI>On the next screen, enter a description (for example, "crypto airdrop") and then enter the total USD amount.</LI> <LI>Select <STRONG>Continue</STRONG> when finished.</LI> </OL> </DIV> <DIV class="ISH_suggestedInformation"> <H2>Related Information:</H2> <UL> <LI> <A href="https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-form-1099-ltc/00/25901" target="_blank">Where do I enter Form 1099-LTC?</A> </LI> <LI> <A href="https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-a-1099-q/00/26766" target="_blank">Where do I enter a 1099-Q?</A> </LI> <LI> <A href="https://ttlc.intuit.com/community/investments/help/what-is-restricted-stock-and-how-is-it-taxed/00/26037" target="_blank">What is restricted stock and how is it taxed?</A> </LI> <LI> <A href="https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-form-1098-t/00/26336" target="_blank">Where do I enter Form 1098-T?</A> </LI> </UL> </DIV>
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Cryptocurrency airdrops are (usually) free distributions of coins or tokens into multiple wallet addresses to promote and drive adoption of a new virtual currency. Recently, the IRS ruled that airdrops, along with promos and staking rewards, only become taxable once the taxpayer "acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency." Airdropped currency not yet usable or accessible would therefore not be taxable until the taxpayer is able to exercise control over it. More info Step 1 - Convert to USD First, convert the value of your airdrops, promos, and rewards to US dollars (USD) if the issuer or exchange hasn't already done this for you. You can use an online cryptocurrency converter, such as CoinMarketCap, to determine the USD value based on either the historical close price or the average price (doesn't matter which one you choose, as long as you stay consistent throughout your calculations.) Be sure to keep notes of your calculations with your tax records in case it's ever questioned. Example: Let's say you received .00017762 BTC as a promo on&nbsp;December 9, 2020 and you were able to immediately exercise control over it (sell, trade, exchange, etc.). On that day, CoinMarketCap reports that the BTC close price was $7,400.90. Multiply t...
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