According to new IRS rulemaking, coins are received when they are manifest on the blockchain. Dont move your coins to the new blockchain, ergo you have not received them, ergo no tax due.
Unless of course you want to claim them. Thats a problem of your own making.
Im amazed that you dont comprehend how a hard fork airdrop works.
I know perfectly well how a hardfork airdrop works, tyvm.
I'm amazed you are seemingly relying upon colloquial definitions of words, in the context where the IRS has very specifically defined them. Have you read the actual ruling?
https://www.irs.gov/pub/irs-drop/rr-19-24.pdf"A hard fork occurs when a cryptocurrency undergoes a protocol change resulting in a permanent diversion from the legacy distributed ledger. This may result in the creation of a new cryptocurrency on a new distributed ledger in addition to the legacy cryptocurrency on the legacy distributed ledger. If your cryptocurrency went through a hard fork, but you did not receive any new cryptocurrency, whether through an airdrop (a
distribution of cryptocurrency to multiple taxpayers distributed ledger addresses) or some other kind of
transfer, you dont have taxable income." (from the associated IRS FAQ, emphasis added)
Resolving a long-standing question, the guidance says new cryptocurrencies created from a fork of an existing blockchain should be treated as an ordinary income equal to the fair market value of the new cryptocurrency when it is received.
In other words, tax liabilities will apply when the new cryptocurrencies are recorded on a blockchain if a taxpayer actually has control over the coins and can spend them.
A23. When you receive cryptocurrency from an airdrop following a hard fork, you will have ordinary income equal to the fair market value of the new cryptocurrency when it is received, which is when the transaction is recorded on the distributed ledger, provided you have dominion and control over the cryptocurrency so that you can transfer, sell, exchange, or otherwise dispose of the cryptocurrency.
A24. If you receive cryptocurrency from an airdrop following a hard fork [
] You have received the cryptocurrency when you can transfer, sell, exchange, or otherwise dispose of it, which is generally the date and time the airdrop is recorded on the distributed ledger.
One unfortunate consequence of this guidance is that third parties can now create tax reporting obligations for you by simply forking a network whose coins you own, or foisting on you an unwanted airdrop.
Individuals would be assessed income when they receive the asset, Hinkes said.
Receipt is defined by dominion and control
so its ability to transfer, sell, exchange or dispose of the asset according to this guidance, he said. The fear is that someone maliciously airdrops and tags you with a giant liability. But [this] fear is a bit oversold because you would only be liable for new income based on the fair market value of the asset when received, and most forks dont start out with a high valuation.
Phillips said it was possible that an individual with an ethereum wallet, for example, could receive an ERC-20 token from an airdrop without realizing it. Depending on how the tokens value fluctuates, this may result in them having to pay income tax on an asset that was worth more when they received it than when they sell the asset.
This can happen when coins hit a high water mark of price discovery right after the airdrop event and the heavy selling could sink the price to a level from which is never recovers, he said.
Here it is quoted directly from the new IRS guidance:A hard fork is unique to distributed ledger technology and occurs when a
cryptocurrency on a distributed ledger undergoes a protocol change resulting in a
permanent diversion from the legacy or existing distributed ledger. A hard fork may
result in the creation of a new cryptocurrency on a new distributed ledger in addition to
the legacy cryptocurrency on the legacy distributed ledger. Following a hard fork,
transactions involving the new cryptocurrency are recorded on the new distributed
ledger and transactions involving the legacy cryptocurrency continue to be recorded on
the legacy distributed ledger.
An airdrop is a means of distributing units of a cryptocurrency to the distributed
ledger addresses of multiple taxpayers. A hard fork followed by an airdrop results in the
distribution of units of the new cryptocurrency to addresses containing the legacy
cryptocurrency. However, a hard fork is not always followed by an airdrop.
Cryptocurrency from an airdrop generally is received on the date and at the time
it is recorded on the distributed ledger. However, a taxpayer may constructively receive
cryptocurrency prior to the airdrop being recorded on the distributed ledger. A taxpayer
does not have receipt of cryptocurrency when the airdrop is recorded on the distributed
ledger if the taxpayer is not able to exercise dominion and control over the
cryptocurrency. For example, a taxpayer does not have dominion and control if the
address to which the cryptocurrency is airdropped is contained in a wallet managed
through a cryptocurrency exchange and the cryptocurrency exchange does not support
the newly-created cryptocurrency such that the airdropped cryptocurrency is not
immediately credited to the taxpayers account at the cryptocurrency exchange. If the
taxpayer later acquires the ability to transfer, sell, exchange, or otherwise dispose of the
cryptocurrency, the taxpayer is treated as receiving the cryptocurrency at that time.
Possessing the private key to sign for the new duplicated, airdropped tokens is precisely dominion and control.
Come on man. I hope you can read.
The case the IRS is referring to when tokens are not airdropped is when the new forked ledger does not (or not immediately) duplicate all of the UTXO of the legacy ledger. IOW, if the new forks protocol does not allow for your private key dominion and control then you would not have received airdropped tokens into your private/public key account. Clearly that exception will not be the case with the coming hard fork-off of Core when the legacy miners violate the Core protocol by taking the SegWit tokens as anyone can spend donations. Also that exception was not the case when BCH forked off from Bitcoin, nor when BSV forked off from BCH. All of these hard forks have been instant and automatic airdrops with income tax accrued to all of us fools.
Many of us already have tax obligations that we have thusly not correctly reported yet. The future penalties and fees are accumulating now as we speak.