I'm trying to report my Crypto Rewards that Coinbase considers Misc. Income. Turbotax keeps asking for a cost basis but there isn't one. How do I enter this?

[JulieS]

The basis of Crypto Rewards through Coinbase is $0. 

The IRS requires you to report the receipt of cryptocurrency that you receive at the time you are in control of it. 

Later when you sell the cryptocurrency, you also report the sale and then your basis is the amount you paid tax on when you received it. 

For example, say you receive $10 worth of Bitcoin on June 1. On December 10, you sell that Bitcoin for $15.

On June 1, you report you received $10 and you basis was $0, this results in $10 taxable income.

On December 10, you sell for $15 and your basis is $10, this results in $5 in taxable income. 

Click here for more information.

[darob1989]

So am I supposed to report each transaction generated by staking? Or can I blanket all of them in to one total? 

[JillS56]

The transactions should be reported on Form 8949 the same as transactions from a 1099-B would be reported.  To enter the transactions go to:

1. Income and Expenses in the Federal section 
2. Click on Investment Income
3. Click on Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B) 
4. Click on the Start or Revisit button
5. Add each transaction.   You will want to report the purchase date under Date Acquired, Date of Sale, Sale Price, Cost, and whether you held it short-term or long-term.

[darob1989]

The problem is that there's no cost basis. TurboTax keeps telling me I'm doing something wrong when I leave it blank. I got free crypto through rewards and interest earned from staking. This honestly shouldn't be this difficult or confusing.

[RaifH]

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:

1. With your return open, go to Federal > Income & Expenses
2. Open the Less Common Income section and start or revisit the last entry, Miscellaneous Income, 1099-A, 1099-C.
3. On the next screen, start/revisit the very last entry, Other Reportable Income, and answer Yes on the following screen.
4. 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.
5. You may repeat this for every currency for which you received interest or reward or combine them on a single line.
6. 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.