The IRS states that new coins received through an airdrop are taxed as ordinary income.
2019-24, "when a taxpayer receives property that is not purchased unless otherwise provided in the code, the taxpayer's basis in the property received is determined by reference to the amount included in gross income, which is the fair market value of the property when the property is received" ( 2 ) ( 1 )Īirdrops are free coins that are sent to your wallet.Īccording to the IRS, Rev. Most major wallets have posted guides about how their users can claim their Flare tokens. The process for claiming Spark tokens will differ depending on which wallet an investor is holding their XRP. Presumably, this is done to reduce selling pressure. The remaining 85% of tokens will be distributed over the next couple of years. Initially, just 15% of the tokens will be distributed. The first distribution will happen when the Flare mainnet goes live, sometime in 2021.
Anyone who was holding XRP at that time was eligible to receive the airdrop. The snapshot for the airdrop took place on December 12th. The distribution is a simple 1-to-1, with 1 Spark token being awarded to an investor for every 1 XRP they own. Spark token is the native token of the Flare Network, and there is a maximum supply of 100 billion Spark (FLR) tokens.įlare Network will be dropping 45 billion of these tokens to XRP holders. Bookmark it for reference.)Ĭrypto Investors who held XRP on certain exchanges back on December 12th, 2020, received an equivalent amount of Spark token via an airdrop. (This is a live document and will be further expanded as needed.
Learn what your tax liability is and find out how to not pay taxes legally on your Spark token airdrop.