Crypto Airdrop Tax Treatment Guide for Free Token Income (2026)
Understand airdrop tax treatment: income recognition timing, fair market value determination, reporting requirements, and documentation for free crypto tokens.
Summary
Airdrops create taxable income when tokens are received. This guide explains income recognition, FMV determination, and reporting for airdrop recipients.
Key Steps
- 1Recognize income at receipt: fair market value on date tokens become accessible.
- 2Track FMV determination: exchange price, market data, or reasonable estimate.
- 3Report as ordinary income: airdrops not treated as capital gains.
- 4Document receipt: screenshot, blockchain record, announcement documentation.
- 5Set cost basis: FMV at receipt becomes cost basis for future disposals.