Crypto glossary
Taxation of airdrops
Airdropped tokens are often taxed as income at their market value when received, then taxed again on any gain or loss when sold.
When a project distributes free tokens to wallets, tax authorities need to decide whether the recipient has received income. Most treat airdrops as taxable when the recipient gains control of tokens that have a determinable market value, with that value becoming the cost basis for a later sale. Tokens with no market at the time of receipt may be treated as having zero value, so the whole later sale price is gain.
In the US, IRS Revenue Ruling 2019-24 holds that tokens received through an airdrop following a hard fork are ordinary income when the taxpayer has dominion and control over them; if no new tokens are received, there is no income. In Spain, the tax agency's rulings have generally treated free airdrops as a capital gain not derived from a transfer, included in the general tax base at market value on receipt. Airdrops received as payment for tasks or services may instead be work or business income.
Large airdrops can create tax bills on tokens whose price later collapses, leaving recipients owing tax on value they never realised.
Example
A US user receives 2,000 governance tokens from an airdrop, worth 1,500 dollars when they land in her wallet. She reports 1,500 dollars of ordinary income, and that becomes her basis if she sells later.