Crypto lending: identify what the contract does

Start with ownership and repayment

Download the agreement before moving coins. Identify who controls the assets, whether you retain ownership, what you receive in exchange and how repayment works. A product labelled earn may create a different legal arrangement from a simple loan.

Keep yield receipts separate from collateral

Ordinary income reporting and the basis of later disposals are separate issues. Record each yield payment in units and USD, with its availability date. A liquidation or swap of collateral can be a disposal even if you did not manually press sell.

General crypto guidance does not settle every loan

The IRS property and disposal rules are a starting point, not a blanket ruling for every lending protocol. Tokenized claims, rehypothecation, insolvency and debt cancellation can require additional analysis.

• Save the contract and changes to its terms.
• Record collateral movements and liquidation notices.
• Reconcile rewards, repayments and fees.
• Ask for transaction-specific advice before filing uncertain treatment.

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