How do I report the swap or exchange of one cryptocurrency token for another?

Forum|Forum|2 years ago
January 31, 2024
1 reply
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Voyager Digital, LLC went bankrupt within the last few years.

As part of their chapter 11 proceedings, they did the following:

1. Swapped / exchanged my 4.02 VGX tokens for USDC.

2. Then swapped / exchanged my USDC balance for USD (dollars).

How do I report this in TurboTax? I have the transaction details with token quantity, price per token, cost basis, etc but I cannot find any details reporting swapping / exchanging one crypto for another.

Thank you.

Best answer by AmyC

The swap consists of the "sale" of one for the purchase of another. You will need to report VGX as a sale under Investment Income.

AmyCAnswer

Employee

The swap consists of the "sale" of one for the purchase of another. You will need to report VGX as a sale under Investment Income.

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uk05Author

Thanks. That's what I just ended up doing.

When VGX -> USDC swap / exchange occurred, the acquire date of VGX tokens is the airdrop date from 2021 (which I already reported as income from tax year 2021) & the sell date is the swap / exchange date in 2023 when it was converted to USDC. The buy & sell cost basis' is the dollar value of the VGX tokens on those acquire & exchange dates.

Likewise for the subsequent USDC -> USD swap / exchange, the acquire date is the same date as the aforementioned VGX -> USDC swap / exchange in 2023 & the sell date is also in 2023 per the transaction report. The buy & sell cost basis' is the dollar value of the USDC token on the above 2023 exchange & sell dates.

Thus, two swaps / exchanges, so two sell transactions.

I'll mark this as closed.

Thank you.