Non-Taxable Transactions: Borrowing Crypto

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Accounting For Crypto Assets

CryptoCFOs

23 episodes

3 months ago

The AccountANTs, Tax Professionals, and Astute Investors Guide To Blockchain, DeFi, NFTs & more. Visit: www.CryptoCFOs.com to join our community and learn more! *This podcast is NOT financial, tax, accounting, or legal advice. The opinions and commentary herein are intended to facilitate discussions only, and may not be relied upon for accuracy; you must conduct your own research or engage with and seek the advice of your accounting/ tax professional and attorney as necessary.

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Non-Taxable Transactions: Borrowing Crypto

Accounting For Crypto Assets

1 minute

1 year ago

Non-Taxable Transactions: Borrowing Crypto

Borrowing crypto assets is no different than borrowing from a traditional lender. The IRS does not consider a loan to be taxable income because it must be repaid. On the other hand, if a crypto loan with an initial USD value of over $600 is forgiven, you should receive a 1099-C for cancellation of debt (COD) income, which is taxable. If the loan provider requires an exchange of crypto for you to get the loan — for example, swapping ETH for cETH to get a loan in Compound (referring to https://compound.finance/) — a conservative approach would be to report the gain or loss, if any, that results from that transaction.