How are crypto airdrops taxed in the US?
Crypto airdrops are usually ordinary income at fair market value when you control them, and the IRS treats digital assets as property for federal tax.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
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- Airdrops are usually ordinary income when you control them.
- Report the receipt date fair market value in USD.
- Your basis equals the income you reported, and later disposals can create gain or loss.
You need the date you gained control, the token amount, and its USD value that day. The guide then covers income, basis, later disposals, and records.
Are crypto airdrops taxable?
The IRS treats digital assets as property under Notice 2014-21 from 2014. An airdrop you can control is generally ordinary income at fair market value when you receive it. Tax applies when you have dominion and control, which means you can move or sell the tokens, not when the airdrop is announced or when you later sell. A token you did not ask for is not tax free if you can control it.
How do I report airdrop income step by step?
Once you have control, report the income and track basis for later disposals. The steps follow the usual order.
- 1Find receipt valueLook up the token's USD value on the date you gained control.
- 2Report as incomeInclude that value as ordinary income on your federal return and answer Yes to the digital assets question.
- 3Set cost basisYour basis equals the amount you reported as income, which reduces gain or increases loss later.
- 4Report later disposalsWhen you sell, swap, or spend the token, report capital gain or loss as proceeds minus basis.
What records should I keep after?
Keep the receipt details with your tax files. Treat unexpected airdrop links as unsafe.
Frequently asked questions
If you cannot move or sell the tokens, you generally lack dominion and control, so the receipt may not be taxable yet.
The income is measured at fair market value on the date you gained control, so a later price drop does not erase it.
You must hold the token more than one year before selling for long term capital gain treatment.
Yes, a hard fork coin is generally treated like an airdrop when you control it.
