The "initial coin offering", or ICO, and the SAFT, or "simple agreement for future tokens", are both tools used by cryptocurrency founders to raise funding to start a blockchain project. In return for FIAT or crypto payments, they promise to provide that early adopter a certain amount of their new token.
If you received any cryptocurrency as the result of ICO or SAFT participation, this guide is here to help you accurately record those transactions in TaxBit.
The main thing to remember is that 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 that 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.
Example: I send 1,000 USDC to a blockchain startup looking to revolutionize baby sitting with the promise of receiving 100,000 $BABY on 06/20/2020. I'd want to record a "Trade" transaction in my account of 1,000 USDC > 100,000 $BABY on that date. You can pick whatever source you like to record that under, though it may be most appropriate to use the source "Other Exchange".
Often that ICO or SAFT payout will be transferred into an on chain wallet. If that does happen, you'll want to add a second transaction to your account, a "Transfer Out" from whatever source you used to record that original "Buy" or "Trade" transaction.
You'll want the date, time and amounts of that transaction to be close to the details of that "Transfer In" of 100,000 $BABY. Doing so should allow TaxBit to move that cost basis pool into that wallet, allowing us to assign cost basis to any disposal you may incur using that asset.
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