Crypto Sacrifice - cap gains loss or other tax treatment?

[AdamAsks]

Hi, I sacrificed $2000 USDC for a coin to make a political statement; I had no expectation of any benefit. Some 15 months later I did receive different coins due to the sacrifice (this is an airdrop). I can't find anything on the web which says how the IRS treats a crypto coin sacrifice. Can consider this a capital loss as the asset was given away in exchange for nothing in return?

If you have any links explaining how this is treated tax-wise, that would be appreciated.

Thank you ~

[Aimee-O · Accepted solution]

Hi Adam!

GREAT Question! 

How the IRS is handling Crypto is continually evolving.  When "sacrificing" your USDC, the IRS considers that a reportable transaction. This is a disposal for tax purposes, and the profit is calculated as the difference between the sale value and the acquisition value. The acquisition value is your original purchase price (or weight average cost).  The sale value is the market value at the time of disposal (sacrifice) the $2000 USDC. 

The airdrops are considered ordinary income for tax purposes.    The IRS has specified that new coins received through an airdrop are taxed as ordinary income. Therefore, you owe income taxes on new coins you have in your wallet as a result of an airdrop (regardless of whether you intended to own these coins or not).

Hopefully, this helps:  Links on Digital Assets from IRS    Tax position on Sacrificed Crypto   Crypto taxes on Airdrops 

[AdamAsks]

@Aimee-O what about staking? Is the cost basis the cost at time of staking or is it considered a capital loss at the time of staking (For example, when staking HEX coin, the HEX is destroyed immediately; you just get an IOU for future HEX based on stake duration, at stake maturity)? I'm asking for the USA. Thank you ~