With the upcoming Arbitrum Airdrop, I was wondering if people knew how claiming airdrops and taxes worked in the US. I was assuming they are treated as regular income and taxed at the price of the asset when claimed.
It would make sense to me that it’s not taxed when claimed, but taxed when sold/realized, but nothing about taxes makes sense so who knows.
Trying to formulate my plan as to how I deal with the airdrop, and want to be safe so I don’t have a surprise check to write to the government next year.
5 thoughts on “Airdrops and taxes”
I work at an accounting firm, we’ve dealt with crypto assets before.
Any that are received as an airdrop or a staking reward would be income with value assigned as the moment the asset becomes accessible to you.
Examples, the airdrop becomes available immediately, and so is considered income at the value when received. In a staking pool, you would not claim every tick, but rather at the moment you hit claim and pay the gas. Once you have claimed the reward, that is the taxable event.
Once you have the crypto it is now treated like an asset. When selling (or more complicated – when trading for other assets) you incur a taxable event in terms of capital gain or a loss. Don’t forget to track your losses! Confusingly, it could be a short term capital gain or a long term capital gain which both have different tax rates as well.
Consider a hypothetical where your company pays you this years salary in the form of a house. To you the house is income and so you get taxed on it. In 10 years you sell the house at 20% more than it was valued at when you were given it, you now pay capital gains (long term) on that difference.
Welcome to crypto!
Yes, I believe in the US airdrops are taxed as income upon receipt. They will also be subject to capital gains when you sell.
If you’re not planning to sell, it may make sense to delay claiming a day or two as price is likely impacted by people who sell immediately.
Thank God I’m not leaving in the USA because I’ll soon receive MAXX airdrop from MAXX Finance. I’m going to stake it to earn fixed, and sustainable interest rates. The platform features high yield, is protected by deflationary measures and backed by validator nodes.
as you pointed out, it can be challenging to ascertain an asset’s fair market value at the time of the airdrop, particularly if it’s a brand-new or extremely volatile product. In this situation, it could be wise to seek the counsel of a tax expert who can advise you on the most advantageous manner to report the airdrop on your taxes and reduce your tax liability.
It’s also important to keep in mind that capital gains taxes, which can be either short-term or long-term depending on how long you hold the asset before selling it, would apply to any gains or losses on the sale of the object that was airdropped.