The initial coin offering (ICO) and the simple agreement for future tokens (SAFT) are tools used by cryptocurrency founders to raise funding for new blockchain projects. In return for fiat or crypto payments, they promise to provide early adopters with a certain amount of their new token.
If you received any cryptocurrency as the result of ICO or SAFT participation, this article will help you record those transactions accurately in TaxBit.
Most importantly, in order to have cost basis correctly assigned to any future disposals of that asset, you need to record a Buy or Trade transaction on the date you sent funds to the organization running the ICO or SAFT. Use a Buy transaction if you send fiat, and a Trade transaction if you send crypto.
For information on how to manually add a transaction to your account, feel free to check out our article HERE on the subject.
You sent 1,000 USDC to a blockchain startup looking to revolutionize baby sitting with the promise of receiving 100,000 $BABY on June 20, 2020. Therefore, on June 20, 2020, I you record a Trade transaction in your account of 1,000 USDC > 100,000 $BABY. You can pick whatever source you’d like to record the transaction under, though it’s probably most appropriate to use the source Other Exchange.
Often, your ICO or SAFT payout will be transferred to a chain wallet. If that occurs, you'll want to add a second transaction to your account—a Transfer Out transaction from whatever source you used to record the original Buy or Trade transaction.
You'll want the date, time, and amount of the transaction to be close to the details of the original Trade Transaction you recorded for the 100,000 $BABY. Doing so should allow TaxBit to move that cost basis pool into the wallet where your asset is being stored, and assign cost basis to any disposal you may incur if you use that asset.
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