I contributed to my first crowdloan late last year. I want to classify the 10 DOT that I contributed to the Acala Crowdloan as a contribution to an ICO, but I’m confused about what to do with the “transaction date” field. It appears to want a span of time. What is this asking for?
You just classify it as ico and it’ll ask you to match the transaction. Then it will turn the transaction into an order classified as ico
Here is the breakdown of classifications: The Different Types of Crypto Transaction Classifications - The Hub: Crypto and Bitcoin Tax Blog | ACCOINTING.com
Here is how you are taxed per classification: https://hub.accointing.com/?s=Specific+tax+classifications&id=3300&post_type=post
EDIT… Ah, I see, the transaction field allows you to specify a span of time to look for the associated token drop.
It’s not really an ICO tho’ - you haven’t traded your DOT for ACA.
The DOT will be locked up for 96 weeks, and you’ll get them back at the end of that period - i.e. they’re still yours.
So… is this really the right way to classify parachain crowdloan contributions?
I’ve added a manual wallet on Accointing where I’ve added my crowdloan contributions, and flagged those contributions as an internal transaction because I don’t want it thinking there was a disposal.
Still I’m not sure how to classify the new tokens that I’ll receive.
So this is a weird case as the laws are not specific in this area, though I am unsure of your country as well. Therefore it is up to the user to classify as they want depending on how they chose to treat this kind of transaction. For example, with loans, the collateral should not be taxable, therefore, it should be an internal transfer as if it was staking, but the keyword is should. if someone wants to be super conservative they could do it as a trade. Similar to a LP, you can treat as a deposit or taxable event, or as if you are staking.
Donpel is trading in USD (From his screenshot ), and I’m in the UK.
I guess I’ve already made the choice on the internal vs trade part of it. It’s tricky, because although I definitely haven’t sold the asset and will get it back in 96 weeks, it’s nevertheless not in my wallet anymore (rather it’s locked up by smart contract).
The bit I’m not so sure about is how to classify the rewards. My instinct is that I want to receive those as if they are worth zero, and then pay capital gains on them when I sell them.
The reason that I say this is that the values of these tokens fluctuate wildly when they’re first introduced, and it takes them a long time to settle down to a stable value (e.g. GLMR briefly recorded an all-time-high of $437 but is now trading around $13).
I’m just not sure what classification to use for that.
I’m sure I saw something about the “airdrop” classification sometimes being classed as income, and other times not, and that there was a way to select, but I’ve been unable to find that.
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At this time, Accointing is not going to take a tax stance on this, it is up to the users to decide what to classify it as, I have sent you the articles on how each classification is taxed already by country
“we let you decide in the tax report page how you want to handle the cost basis of these” ← where is this??
I’ve realised that I can use “Bounty” for Coinbase Earn.
This leaves “Airdrop” for ISPOs, but I can’t see any toggle for choosing how to handle the cost basis.
I dealt with the DOT Crowdloand contributions as follows:
(1) I created a separate wallet to which I trabsferred the DOT associated with each crowdloan.
(2) When Receiving the rewards (the show up via API), I classified them as Staking Income (as that comes closest imho).
(3) after 24M when DOT gets unlocked again, I transfer it back from the proxy wallet to polkadto.js.org wallet.
Any other ideas/approaches?
btw - I add ICOs maunally at the date of the buy, not when tokens become available according to vesting, as I think that the holding period for tax free sales (12 months in Germany) starts with the sale not with the delivery (not tax advice, though).
Yeah - I’ve done a similar thing, although I’ve only used a single wallet to represent all of the funds locked up in the crowdloan smart contracts.
I guess the two choices are:
a) Receive 1 GLMR and pay income tax on it - best matched by “staking income”
b) Receive 1 GLMR and because it’s a new token its cost basis should be £0 / €0. Pay no tax immediately, but then pay capital gains on the current price.
I didn’t want to do option a, because I was worried Accointing would say “hey - you’ve received 1 GLMR, and Coinmarketcap says these are currently worth $430”, and you need to pay income tax on that (It’s currently worth about $9, but it was for a brief moment worth $430!).
I guess setting the dates earlier as you have done would fix that problem, but I’m hoping to have everything apart from the pretend wallet I added (for holding the crowdloan balances) be automatically imported if possible. I don’t want to do too much manual stuff as I’ll introduce errors.
I’m not sure what classification I should use for option b - i.e. received tokens with a cost basis of 0.
Yeah this makes a lot of sense. In that way these crowdloans act a lot more like airdrops than ICOs.
I think this is the approach I’ll take until there is further tax law clarity on this in the US. Thanks @Wobble.
I just want to be clear that I never asked about tax law, or even how to classify any transaction. My question was only about what inputs the interface was asking for.
Sorry - I think that was me causing trouble and asking further questions
We updated our classifications recently and the new definitions are listed review process.
We are working on a way to make this happen, possibly on the tax settings page. We are also in the process of updating our articles to reflect the updates to the classification definitions.
In my opinion, I would send the assets to a placeholder wallet until it is deposited back into your wallet. Then classify the new asset received as either Airdrop or Staking Income. Whichever classification sounds like the closest match to you.
Great - I think that will work well once the “how to handle airdrops” setting is available. Thanks
But if you specifically want to have no cost basis, you’ll have to classify it as “added funds” or use a workaround to indicate that you actually received $0 classified as “airdrop” or “staking income” and do an order transaction of that $0 for the asset you actually received.
Both of those options will give you a $0 cost basis for the asset.
Here is the breakdown of classifications: Crypto Tax Classifications : Accointing AG
Here is how you are taxed per classification: https://www.accointing.com/the-hub/?s=classifications&id=3300&post_type=post