Taxes for Airdrops and Rewards? - page 2.

jseverson

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Quote from: squatter on August 25, 2020, 04:29:59 AM

-snip-

Excellent breakdown.

Quote from: Bitcoin_bullish on August 25, 2020, 04:59:45 AM

They do confuse them indeed. I think they are just talking about hard-forked coins exclusively.

They don't have specific rules for just airdrops, but I would expect them to treat it the same way as forked coins. The forked coin scenario is probably just a lot more common, because as squatter has said, most random airdrops have little to no value anyway.

Bitcoin_bullish

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Quote from: jerry0 on August 24, 2020, 09:31:41 PM

let say your rewards are a few hundred dollars to make it simple or even 50 dollars.

I don't know if a bill from February was passed that exempts reporting gains less than $200. (link).

If this law did pass then you won't need to declare this amount.

Quote from: squatter on August 25, 2020, 04:29:59 AM

Quote from: jseverson on August 25, 2020, 02:43:38 AM

Assuming you live in the US, you should have paid taxes for them (as income) when you received them.

This is actually written in a way that confuses airdrops with hard forks, but let's ignore that for now since the OP is only interested in airdrops.

They do confuse them indeed. I think they are just talking about hard-forked coins exclusively. Although there are also airdrops that have lock period or other shenanigans not allowing to trade at a price which might be very high when received.

squatter

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STOP SNITCHIN'

Quote from: jseverson on August 25, 2020, 02:43:38 AM

Assuming you live in the US, you should have paid taxes for them (as income) when you received them.

Not so fast -- lets unpack at what the IRS is saying here:

Quote from: jseverson on August 25, 2020, 02:43:38 AM

You can file for a loss, so not necessarily.

In general, you can only file for capital losses up to $3,000 per year. Anything past that has to be deferred to future tax years, at the same limit.

This is especially problematic if your exchange credits a hard fork or airdrop at an overinflated valuation and you don't -- or are unable to -- immediately sell. You could incur lots of ordinary income at the time of receipt, but won't be able to deduct all the capital losses in the same tax year, resulting in a large tax bill.

jseverson

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Assuming you live in the US, you should have paid taxes for them (as income) when you received them. You don't pay capital gains for them until you sell or convert.

Quote from: jerry0 on August 24, 2020, 09:31:41 PM

If so, wouldn't that mean if you get rewards/airdrops, you need to always cash out?

You can file for a loss, so not necessarily.

jerry0

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So in one of my wallets, i get some rewards buts its very little. Its with waves and i got some waves and also some other airdrops a while back like vostok a while back. The issue is those don't seem to be worth much or anything anymore. Some that use to be a dollar i believe is zero now. Assuming you never cashed them out or sold them for another coin, how does that work? The thing is say you get that as profit but you never cash them out... let say your rewards are a few hundred dollars to make it simple or even 50 dollars. Do you have to file any capital gains on this? Now say you have to but again never cash out... then in the future... those airdrops etc go to zero... then what happens? You basically paid taxes on that small profit but because you didn't cash it out, you are screwed? Example say you earned 500 dollars worth of rewards/airdrops... you pay thirty five percent tax... then when it gets to 0... well now you basically lost out on it because you didn't cash out? If so, wouldn't that mean if you get rewards/airdrops, you need to always cash out?

Topic: Taxes for Airdrops and Rewards? - page 2. (Read 400 times)