[JumpCrisscross]

"Chain-splits. These occur when a cryptocurrency branches into two or more versions, as bitcoin and Bitcoin Cash did last year. Investors are often entitled to new coins as a result.

Does this right generate taxable income?"

Huh.

[Obi_Juan_Kenobi]

This is probably the biggest open question, with no good answer.

For Bitcoin Cash, if you declare that, what value do you use? Futures price before the fork? Price immediately after? Which exchange? And the price fluctuated wildly, so they all seem arbitrary.

The alternative is to claim a cost-basis of $0 when you actually realize those gains, which makes a hell of a lot more sense to me, but the IRS might disagree. Who knows?

And what about Bitcoin Gold or the dozens of super-shady forks? Technically they have value, but it's value I don't think I'll realize because they're so shady. You have to go through the trouble of clearing your wallet of 'real' Bitcoin, and then import it to whatever 'totally not going to hack you' wallet software you need to use to claim it. Even if you don't lose your 'real' Bitcoin, all the other shady forks could be stolen. It's clearly not 'real' in the way that traditional securities are.

[heed]

Further, anyone can fork a coin at any time; there could be dozens a year. Am I supposed to keep track of every single fork of every coin I hold?

Also what if I haven't imported my private key into the forked coin's wallet? Do I have to report the income right away or only until after I've gained control of the coins?