Is the earn program for crypto considered as taxable transaction?

[yatoshura]

I use crypto.com's earn program to earn interests on my USDC in the crypto wallet. When I allocate some of the USDC into the earn program's 3 month term, it will create a new transaction in my crypto.com history. Similarly when the 3 month term ended, the allocated USDC was returned back to my crypto wallet in the exchange automatically. Are these allocate transactions considered as transfers, deposits or withdrawals? Which TurboTax crypto transaction types should I use when reporting for each of these operation?

Note, these transfer did not sell any of the USDC that is used in the earn program. I do earn a small amount of USDC interests each day in the program and it all gets released back into my crypto.com wallet at the end of the 3 month term.

[JamesG1]

This sounds like staking rewards which can be reported as other income.

Staking rewards only become taxable once the taxpayer "acquires the ability to transfer, sell, exchange, or otherwise dispose of the cryptocurrency." 

You will need to convert your staking rewards to US dollars if they haven't been issued as U.S. dollars. 

Follow these steps:

• Down the left side of the screen, click Federal.
• Down the left side of the screen, click Wages & Income.
• Click Show more to the right of Less Common Income.
• To the right of Miscellaneous Income, 1099-A, 1099-C, click the Start / Revisit button.
• To the right of Other reportable income, click the Start / Revisit button.
• At the screen Other Taxable Income, enter a description such as “Cryptocurrency rewards” and an amount. 

The entries will be reported:

• on line 8z of Schedule 1 of the Federal 1040 tax return, and 
• on line 8 of the Federal 1040 tax return.

@yatoshura 

[yatoshura]

Thanks for the reply.

The daily USDC interests that I earned on my USDC fund that was locked in the 3 month term of this program is certainly income as you've mentioned.

I'm curious about the deposit and withdrawal transactions to get the USDC into this program at the start of the term and out of this program at the end of the term. They seem to be internal operations that crypto.com does and record when the fund goes into and out of the earn program. Do I simply leave out the so called deposits and withdrawals out from the transactions that I report since I'm not buying nor selling the USDC? 

@JamesG1 

[GeorgeM777]

The deposits and withdrawals do not appear to be the type of transaction that would get reported on a tax return.   To follow-up on the comments from @JamesG1, just report the interest income you received in connection with the earn program.  You don't need to report the deposits or withdrawals as separate transactions.  

@yatoshura