How to document Crowdloans?

Hello together,

I have a basic question regarding documentation of crowdloaning in transactions.

  • I participated in a crowdloan and have loaned Kusama for 48 weeks. I marked the removal of KSM with ‘lend’
  • I received project tokens as rewards - I marked them as ‘lending income’

Two questions:

  1. How shall I mark the Kusama after 48 weeks, when I get them back
  2. Have my assumptions above been correct or do i need to mark differently?

Kind regards
Wolfgang

Dear team,

any advise how to mark the transactions correctly? Please kindy provide feedback!

Kind regards
Wolfgang

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Here is the breakdown of classifications: Crypto Tax Classifications : Accointing AG
Here is how you are taxed per classification: You searched for classifications - The Hub on ACCOINTING.com

Hey guys! I understand your frustration with the staked and staking classifications so just to clear this out from our standpoint:

all tokens that were staked=do not classify
all tokens that came as a reward for staked tokens=staking

The reason why we don’t have more strict guidelines is because there aren’t any and they are subject to the interpretation of the different jurisdictions. That bein said, here is an article from Bloomberg providing further context on the matter:

Now, the lender could be considered to have converted their crypto for another crypto when they “stake” their money into the liquidity pool and received another token they can sell elsewhere. That is a taxable event, so in this example, just as dividends are taxable, so are tokens generated from staking activities.

However, it’s not as straight-forward as that because this transaction can also be viewed in another way; in that what the lender deposited in the liquidity pool is still their money and the tokens they receive in exchange is nothing more than a receipt. That means it is not a taxable event.

Meanwhile, on the borrower’s side, it can be argued that depositing collateral and receiving a loan in a different token form is akin to an exchange transaction, so a taxable event. Of course, usually taking a loan is not a taxable event. However, the transaction on a DeFi is unique. Unlike conventional loans, it includes depositing one currency as collateral to receive a loan in another.

If you need any tax assistance with your crypto taxes, make sure you visit ACTAN in the Hub where any of our crypto tax professionals can help you out.


Also consider the following:
Liquidity Pools: below is a link to a blog post about the topic, staking pools would be handled the same way as liquidity pools.

Some Staking Articles in The Hub:
https://www.accointing.com/the-hub/?s=staking&id=3300&post_type=post

Hey @Matt , in @Trobriand 's case, he wants to make sure that the deposit and withdraw do not count as taxable events. How do we mark both transactions to not be taxable, besides ignoring both of them? You could argue that crowdloans are not taxable if their purpose is using the token to vote, rather than commit a financial transaction. I haven’t heard of anyone being taxed for proxy voting with shares of stock from a publicly traded company.

In the US, if you are performing crypto trades through a business, then the fees would become deductible business expenses. If you ignore the two transactions, then you lose track of deductible fees.

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Please find the appropriate classification :slight_smile:

Here is the breakdown of classifications: Crypto Tax Classifications : Accointing AG
Here is how you are taxed per classification: You searched for classifications - The Hub on ACCOINTING.com

Hi Matt,

I’ve read the article you posted “Managing Liquidity Pool Transactions”, and have used the suggested workaround from that article to deal with my Polkadot crowdloan contribution:

All seems sane, and looks great until I go back to the wallets screen where I see this:

image

The wallet’s telling Accointing that there’s only 1.1766 DOT in the account because in reality there actually is - the rest has been locked/moved away as part of the crowdloan smart contract.

However, for tax purposes I want to consider that the “missing” 25.75 DOT is still there. It’s not a disposal, it’s still my DOT, and it will be back after 2 years.

I can ignore the transaction and manually add the fee, Accointing says “no - you’re wrong” and displays figures as if I only have 1 DOT in the account :smiley:

Summary: Used your suggested workaround, which seems very sensible, but Accointing shouts at me and shows the wrong figure regardless, meaning that I will need to deal with this account manually via CSV.

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You could also try this

Ooh - that’s an interesting idea, and more likely to work I think. I’d be able to keep my wallets auto-updating/feeding from the API/blockchain, and could just have one manual wallet for holding the collective crownloan balances.

Thanks Matt :slight_smile:

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