Where to report blockfi interest

[daherbie]

I had a blockfi interest acccount in 2021 that returned under $600 in earnings (so no 1099-MISC was sent).  How do I enter this in turbotax?

[HelenC12]

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 that's not yet usable or accessible would therefore not be taxable until the taxpayer can exercise control over it.

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 .000027762 BTC as a promo on December 9, 2021, and you were able to immediately exercise control over it (sell, trade, exchange, etc.).

1. On that day, CoinMarketCap reports that the BTC close price was $47,672.12.
2. Multiply the quantity received by the close price (.000027762 × $47,672.12 = $1.32 rounded).
3. Repeat this calculation for all airdrops, promos, and staking rewards received in 2021, based on the close price of the day you were able to exercise control over them.
4. Add them together for one total sum, and move on to the next section.

Step 2 - Enter in TurboTax

Once you have the USD values, here's how to enter them into TurboTax:

1. With your return open, go to Federal then Wages & Income
2. Open the Less Common Income section and select Start or Revisit next to Miscellaneous Income, 1099-A, 1099-C
3. On the next screen, select Start or Revisit the very last entry, Other Reportable Income
4. Answer Yes on the Any Other Taxable Income? screen
5. On the next screen, enter a description (for example, "crypto airdrop") and then enter the total USD amount
6. Select Continue when finished