How it works
Under Revenue Ruling 2019-24, tokens you receive in an airdrop are ordinary income at their fair market value on the date you can dispose of them, whether or not you asked for them. That value becomes your cost basis. If the tokens have no market and no way to be transferred, there may be nothing to report until that changes.
Why it matters
Airdrops create income at receipt even when the token later collapses, and the receipt date, not the announcement date, controls. Selling later at a lower price produces a capital loss that offsets other gains, but only if you first reported the income.
Example
A protocol airdrops you 500 tokens worth 2 dollars each on the day they hit your wallet. You report 1,000 dollars of income. If you sell them a year later for 300 dollars, you have a 700 dollar capital loss.
Related: Revenue Ruling 2019-24, hard fork, dominion and control.
