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In my opinion it doesn't make sense to pay taxes on a fork until you sell it and realize the gains. Otherwise do you pay taxes a second time when you do sell it
by tuesdayrain 7y ago
In my opinion it doesn't make sense to pay taxes on a fork until you sell it and realize the gains. Otherwise do you pay taxes a second time when you do sell it?
- jron 7y agoI agree. The IRS should simply mandate that forked coins have a purchase price of 0 USD. When sold, the tax event occurs and the seller simply pays the short term or long term realized gain.
- gamblor956 7y agoThey do have a purchase price of $0. That's exactly why it's taxable income. If you had to pay market value for the forked coins they wouldn't be taxed when you received them.
- mths 7y agoQuickly, what's X*0? I'm aware that there's situations where a CGT event occurs even without selling your asset, but this shouldn't be one of them.
- gamblor956 7y agoIt's not a capital gains transaction. It's a receipt of income transaction. You receive crypto worth $X that you paid $0 for. Thus, you have $X in income and owe income taxes on that. If you paid $Y for the crypto, then you had $X-$Y in income (similar to in-the-money stock options). Your cost basis would be $Y in the $X of coins, so if you ever sell them, then your income is $Z (value at time of sale) less $Y in capital gains.
- wmf 7y agoYou would pay tax a second time, but only on the difference between the fork price and the price you sold for. They're not trying to double-tax you on the same money.