Investing in an ICO (Initial Coin Offering) or an IEO (Initial Exchange Offering) needs to be added to Coinpanda to give you accurate tax information.
Buying into an ICO or IEO is essentially the same as making a cryptocurrency trade through an exchange where you are trading one coin for another. You can either import the transaction automatically with auto-sync for your blockchain address if you invested directly from your wallet, or you can add these transactions into our generic Excel file and upload the file to Coinpanda.
Let's say you sent 5 ETH to a wallet address and in turn, received 2,000 ICX tokens for their ICO. You would then add one Trade transaction in the generic Excel file this way:
5 ETH as the coin sold/sent
2,000 ICX as the coin bought/received
Any gas fees paid as the transaction fee
Then save the file and upload it to Coinpanda.
What if I received the tokens a long time after the initial investment date?
This will depend on each different country's tax treatment of investing in ICOs, so we can only comment on this for US taxpayers since the tax authority in the US seems to be the only agency that has actually made specific statements about this scenario.
The IRS is very clear about the fact that you are not realizing any gains before you are actually receiving the new token in your wallet or account. The implication of this is that if you invest in an ICO on January 1st, 2020, but do not receive the new tokens before August 20th, 2021, you will not realize gains on the cryptocurrency sold before August 2021 on the date you actually received the new tokens. The acquisition date for the ICO tokens will therefore also be August 20th, 2021, and this date will be considered when calculating short-term and long-term gains later when the coins are disposed of in the future.
Let's look at a simple example:
2020-01-01: You invest 1 ETH in the ICO for XYZ token and pay 0.002 ETH in gas fees. You will receive 500 tokens according to the applicable ICO rate.
2021-08-20: You receive all 500 XYZ tokens in your wallet
The most accurate way to import this transaction would be to import a single Trade transaction to Coinpanda this way:
2021-08-20: 1 ETH → 500 XYZ + 0.002 ETH fee