So if you get a new coin from a hard fork, you owe taxes on the fair market value of that new coin you get. This seems pretty dangerous - if the fair market value is high on the first day of trading, but declines a lot, you could get taxed on value that you never realized.
It seems like this will incentivize people to sell off new tokens immediately, in order to pay the taxes they incurred during the fork.
To me it seems very unintuitive to tax a hard fork. It is like taxing a stock split. Your asset hasn't really changed, it is just now represented in a different way.
Another weird thing about these taxes is that they assume that one of the forks is the "real asset" and the other fork is the "new asset". In practice, it seems like a lot of times a fork happens along with a lot of argument about which side of the fork is the "real" one.
Well, I guess the IRS does not see cryptocurrency the same way as my intuition would.
It seems like this will incentivize people to sell off new tokens immediately, in order to pay the taxes they incurred during the fork.
To me it seems very unintuitive to tax a hard fork. It is like taxing a stock split. Your asset hasn't really changed, it is just now represented in a different way.
Another weird thing about these taxes is that they assume that one of the forks is the "real asset" and the other fork is the "new asset". In practice, it seems like a lot of times a fork happens along with a lot of argument about which side of the fork is the "real" one.
Well, I guess the IRS does not see cryptocurrency the same way as my intuition would.