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Should I correct my cost basis on 1099-B from Blockfi for intest payments?

Forum|Forum|3 years ago
March 12, 2023
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I had money in a GUSD/gemini account earning interest in gemini stable coins at Blockfi - The 1099-B I got from blockfi is reporting the basis for those interest payments equal to the interest payments meaning no shortterm capital gains reports. Should I correct that gain (adjust my total cost basis in turbotax) with a code B (cost basis incorrect on form) or report that interest income under miscellaneous income? Does it matter in terms of audit/irs review (feels like correcting the 1099-B would flag some sort of review so I'm tempted to leave it and add the interest to a MISC income?).

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Best answer by JohnB5677

No, you should not change the cost basis.

I want to be sure I understand.

You have Crypto that you are gaining interest on.

Crypto-related interest and staking rewards should be reported as 'Other Income' on Schedule 1.

If you have Crypto interest, it can be posted to Other reportable income.

Start at Federal

Wages & Income.
Scroll to Less Common Income.
From the drop-down select Miscellaneous Income [Select / Revisit].
Choose Other reportable income.
Follow the Interview.

If you received Crypto coins as payment for the interest, that is the correct basis of those coins.

The cost basis is correct.
You do not owe any tax until you dispose of the coins.
When you do start to sell, trade, exchange, spend or otherwise dispose of the coins it will be a taxable event.
You will have to follow the FIFO rule. First in, first out.

If this does not completely answer your question, please contact us again and provide some additional details.

We are having an Ask the Experts event specifically about Crypto transactions on 03/15/23. Please register for it here.

Edited 03/12/2023 10:17 AM

JohnB5677Answer