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https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/ https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/ What if you had no interest in BCH but you owned 1,

https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/ https://bitcoin.tax/blog/how-to-tax-bitcoin-cash-bch/ What if you had no interest in BCH but you owned 1,000 BTC. Do you suddenly have a $277,000 income tax bill? Yes, as discussed by Tyson Cross, tax attorney at BitcoinTaxSolutions.com. Since you have accession to wealth then this is taxable income.

chrisco255 9y ago
At what price would you go off of? The price when Coinbase granted access? Or the price of BCH when the actual fork happened?
- elliotec 9y ago
  The actual fork, because that's when it became yours technically.
  - makomk 9y ago
    It was literally impossible for most holders to sell at the price when the Bitcoin Cash fork happened because none of the exchanges were accepting deposits. Part of the reason the price was so high then was exactly because people couldn't sell; it dropped as soon as deposits opened. (Since this happened at different times on different exchanges, the prices diverged quite a lot too.)
    - vkou 9y ago
      It's literally impossible for most holders of pre-ipo options to sell them, or their stock, but their tax bill is due the day the leave their employer, not the day that those options/stocks become liquid. Surprise, tax law isn't fair. Surprise, nobody is looking to change that.
josephagoss 9y ago
Here is a counter point I would argue. Anyone can make a Bitcoin fork, in fact Bitcoin forks are being made every week now. Is every Bitcoin holder now liable for that? Also these forks often collapse, so when was the income gain? The same day? You'd have people owing more tax than their entire net worth. (Forks often pump in the first day/week then drop to nothing.) If this is possible then you could attack every Bitcoin holder by making millions of forks each day and making lots of trades to give each fork real value. If you don't declare each fork you end up getting penalties. I would imagine a more sane way to deal with this is like how the ATO deals with Bitcoin mining. You mine Bitcoin but it's not realized until transferred to a third party. I would argue the same for forks. A fork is made, you have coins. But it's not like you received those coins. Technically you always had them as they are old coins just now on a different chain. If you sell the coins then it's a gain that you owe tax on. But forcing each user to track every fork as income is impractical and not viable. You'll see more of this as thousands of forks come into existence over the coming years. This is something I would actually look into getting a private ruling about.
- schrodinger 9y ago
  Wouldn’t it not count as income until you sold it for USD? In which case you wouldn’t be liable for every fork, just the ones you benefitted from.
  - bencollier49 9y ago
    That's the way it's treated in UK law, but apparently in the US, you're liable for the tax as soon as you have access to the asset. I think the same thing causes people problems with stock options. Seems like an odd bit of legislation.
    - schrodinger 9y ago
      Hmm, are you sure? I thought that if you held bitcoin for over a year, it would be taxed as capital gains? Meaning you don't realize the value until you sell it?
crystaln 9y ago
If it's viewed as an asset split, which is probably more defensible, then there are no tax liabilities incurred.

chrisco255 9y ago

At what price would you go off of? The price when Coinbase granted access? Or the price of BCH when the actual fork happened?

elliotec 9y ago
The actual fork, because that's when it became yours technically.
- makomk 9y ago
  It was literally impossible for most holders to sell at the price when the Bitcoin Cash fork happened because none of the exchanges were accepting deposits. Part of the reason the price was so high then was exactly because people couldn't sell; it dropped as soon as deposits opened. (Since this happened at different times on different exchanges, the prices diverged quite a lot too.)
  - vkou 9y ago
    It's literally impossible for most holders of pre-ipo options to sell them, or their stock, but their tax bill is due the day the leave their employer, not the day that those options/stocks become liquid. Surprise, tax law isn't fair. Surprise, nobody is looking to change that.

josephagoss 9y ago

Here is a counter point I would argue. Anyone can make a Bitcoin fork, in fact Bitcoin forks are being made every week now. Is every Bitcoin holder now liable for that? Also these forks often collapse, so when was the income gain? The same day? You'd have people owing more tax than their entire net worth. (Forks often pump in the first day/week then drop to nothing.) If this is possible then you could attack every Bitcoin holder by making millions of forks each day and making lots of trades to give each fork real value. If you don't declare each fork you end up getting penalties. I would imagine a more sane way to deal with this is like how the ATO deals with Bitcoin mining. You mine Bitcoin but it's not realized until transferred to a third party. I would argue the same for forks. A fork is made, you have coins. But it's not like you received those coins. Technically you always had them as they are old coins just now on a different chain. If you sell the coins then it's a gain that you owe tax on. But forcing each user to track every fork as income is impractical and not viable. You'll see more of this as thousands of forks come into existence over the coming years. This is something I would actually look into getting a private ruling about.

schrodinger 9y ago
Wouldn’t it not count as income until you sold it for USD? In which case you wouldn’t be liable for every fork, just the ones you benefitted from.
- bencollier49 9y ago
  That's the way it's treated in UK law, but apparently in the US, you're liable for the tax as soon as you have access to the asset. I think the same thing causes people problems with stock options. Seems like an odd bit of legislation.
  - schrodinger 9y ago
    Hmm, are you sure? I thought that if you held bitcoin for over a year, it would be taxed as capital gains? Meaning you don't realize the value until you sell it?

crystaln 9y ago

If it's viewed as an asset split, which is probably more defensible, then there are no tax liabilities incurred.