On October 9, the IRS issued Revenue Ruling 2019-24, which addresses the tax treatment of cryptocurrency hard forks and airdrops. Very generally, a hard fork occurs when a cryptocurrency splits into two cryptocurrencies: the original pre-fork cryptocurrency and a new post-fork cryptocurrency. An airdrop occurs when a taxpayer receives cryptocurrency on a promotional basis.
Under the ruling, a taxpayer will not be taxed solely as a result of a hard fork, but will be taxed on the fair market value of any airdropped cryptocurrency when the taxpayer has dominion and control over the cryptocurrency.
For a discussion of other IRS actions relating to cryptocurrency transactions, please see our previous BrassTax articles here and here.
Linda Z. Swartz
Partner
T. +1 212 504 6062
linda.swartz@cwt.com
Adam Blakemore
Partner
T. +44 (0) 20 7170 8697
adam.blakemore@cwt.com
Jon Brose
Partner
T. +1 212 504 6376
jon.brose@cwt.com
Andrew Carlon
Partner
T. +1 212 504 6378
andrew.carlon@cwt.com
Mark P. Howe
Partner
T. +1 202 862 2236
mark.howe@cwt.com
Catherine Richardson
Partner
T. +44 (0) 20 7170 8677
catherine.richardson@cwt.com
Gary T. Silverstein
Partner
T. +1 212 504 6858
gary.silverstein@cwt.com