The IRS answer, in plain English — for US holders.
Airdrops are ordinary income at fair market value when you can control the tokens. Selling is a second, separate tax event.
Dominion and control: can you transfer, sell or exchange the tokens? That moment — not the announcement — is your tax date.
400 tokens at $2 = $800 income and $800 basis. Sell at $5 each ($2,000) and the gain is $1,200.
Claim $800, sell later for $300: the $800 income stays, and the $500 loss only offsets gains plus $3,000 a year.
Claim-based: taxed at claim. Exchange unsupported: taxed when credited. Locked: taxed when the lock lifts.
Schedule 1, line 8z for the income. Form 8949 when you sell. Answer Yes to the Form 1040 digital-asset question.
Worked examples, the five costly mistakes, and the scam warning — all in the free guide.
Read the Full Guide →