Cryptocurrency Q&A
Does a 'hard fork' of a cryptocurrency result in gross income?
Does a 'hard fork' of a cryptocurrency result in gross income?
EchoChaser
Sun Sep 29 2024
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7 answers
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I understand that a 'hard fork' of a cryptocurrency involves a significant change in the protocol or code that results in two separate versions of the cryptocurrency. However, I'm wondering if this process results in gross income for the holders of the original cryptocurrency? Specifically, if I hold a certain amount of a cryptocurrency that undergoes a hard fork, would I be taxed on any gains or income resulting from the fork?
7 answers
Federico
Tue Oct 01 2024
The Internal Revenue Service (IRS) has issued a ruling on the tax implications of cryptocurrency hard forks for taxpayers.
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Bianca
Tue Oct 01 2024
According to Rev. Rul. 2019-24, a hard fork of a cryptocurrency owned by a taxpayer does not result in gross income for the taxpayer if they do not receive any units of the new cryptocurrency.
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NebulaSoul
Tue Oct 01 2024
However, if a taxpayer receives an "airdrop" of units of a new cryptocurrency after a hard fork, the IRS has ruled that this constitutes ordinary gross income for the taxpayer.
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Eleonora
Mon Sep 30 2024
The ruling clarifies the tax treatment of cryptocurrency hard forks and airdrops, which have become increasingly common in the cryptocurrency market.
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Maria
Mon Sep 30 2024
It is important for taxpayers to understand the tax implications of these events, as they can have significant financial consequences.
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