The Internal Revenue Service released its newest FAQ and guidelines on taxing US nationals for crypto transactions. The updated guidelines may come as a surprise to those that once rejoiced because of hard forks and the “free” coins that came with them.
Is a Hard Fork Really Income?
Outside of the already established rules for declaring short-term or long-term capital gains, the IRS believes coins originating in a hard fork created taxable income for the year in which the coins were received.
IRS cryptocurrency guidance!
“If a hard fork is followed by an airdrop and you receive new cryptocurrency, you will have taxable income in the taxable year you receive that cryptocurrency.”
More to come as we digest
— Neeraj K. Agrawal (@NeerajKA) October 9, 2019
Twitter commenters immediately noted that the IRS misinterpreted hard forks, which do not lead to an airdrop. Instead, the owner is immediately in control of assets on a new chain. The IRS, however, has put up a condition for recognizing income from airdropped coins. The taxable…