Crypto Airdrop Taxes
The airdrop cryptocurrency will be taxed as ordinary income on the date of receipt and the holding period will begin on that day. The basis of the airdrop cryptocurrency and the amount recognized as ordinary income will be the fair market value of the cryptocurrency on the day it is received (i.e. “matching basis”)
There may be cases in which the value of the airdrop cryptocurrency is of minimal or zero value for which there is no true value based on the absence of a market to sell or exchange the currency.
To report the airdrop cryptocurrency as ordinary income, the taxpayer will report the fair market value as other ordinary income on Form 1040.
Any further sales or exchanges of the airdrop cryptocurrency will follow capital gain or loss recognition.
Airdrop Taxation Example