[zjs]

I'm not sure if numbering is stable (so perhaps this was A24 at one point), but I find this the most relevant portion of the FAQ:

Q27. I received cryptocurrency that does not have a published value in exchange for property or services. How do I determine the cryptocurrency’s fair market value?

A27. When you receive cryptocurrency in exchange for property or services, and that cryptocurrency is not traded on any cryptocurrency exchange and does not have a published value, then the fair market value of the cryptocurrency received is equal to the fair market value of the property or services exchanged for the cryptocurrency when the transaction occurs.

If there is not [yet] a published value at the time of the airdrop, A27 seems to suggest that "the fair market value of the cryptocurrency received is equal to the fair market value of the property or services exchanged for the cryptocurrency when the transaction occurs". If you received the cryptocurrency in exchange for nothing, I'd conclude that the fair market value was $0.

(IANAL, IANYL, YMMV, etc.)

[dodobirdlord]

What the IRS likes to see in audits that involve questions that don't have clear answers is that you made a good-faith interpretation of the law and applied it consistently. You can even have picked the interpretation that benefits you, that's ok. If you did all of your taxes based on this logic, and subsequently paid capital gains tax on 100% of the value of any forked cryptocurrencies you sold I'd expect that to turn out fine for you even if the IRS ends up disagreeing. The IRS has an entire appeals process because they expect to encounter scenarios where there aren't clear answers.

An old but entertaining example, what's the inheritance tax value of a famous work of art that is illegal to sell because it contains a stuffed bald eagle?

https://www.nytimes.com/2012/07/22/arts/design/a-catch-22-of...