TaxConnections

Access Leading Tax Experts And Technology
In Our Global Digital Marketplace

Please Type Topic Into Search Bar

Does a taxpayer have gross income under § 61 of the Internal Revenue Code (Code) as a result of a hard fork of a cryptocurrency the taxpayer owns if the taxpayer does not receive units of a new cryptocurrency?

IRS Cryptocurrency
TaxConnections Members... Answer This Question Want To be One of Our Tax Experts? Register Here

Tax Professional Answers

User Photo
Gary Heald, Jr.
According to the IRS Revenue Ruling 2019-24, Virtual currency is a digital representation of value that functions as a medium of
exchange, a unit of account, and a store of value other than a representation of the United States dollar or a foreign currency. Foreign currency is the coin and paper money of a country other than the United States that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance. See 31 C.F.R. § 1010.100(m).

Cryptocurrency is a type of virtual currency that utilizes cryptography to secure transactions that are digitally recorded on a distributed ledger, such as a blockchain. Units of cryptocurrency are generally referred to as coins or tokens. Distributed ledger technology uses independent digital systems to record, share, and synchronize transactions, the details of which are recorded in multiple places at the same time withno central data store or administration functionality.
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. SEE MORE at www.irs.gov/pub/irs-drop/rr-19-24.pdf
Leave a Comment 5 weeks ago


Meet Leading Tax Advisors

User Photo John Stancil

Professor

Lakeland

User Photo Peter J. Scalise

Federal Tax Credits & Incentives Practice Leader

New York, NY

User Photo John Dundon, II EA

Tax Director

Denver, CO

User Photo William Rogers, CFP, MBA, EA

CEO/Certified Financial Advisor

Rancho Santa Fe, CA

User Photo Monika Miles

President

San Jose, CA

User Photo Blake Christian

Tax Partner

Long Beach/ Park City, CA

User Photo John Richardson

Lawyer

Toronto, Canada

 

View/Select our Current List of Tax Topics

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Previous PageNext Page

INCREASE KNOWLEDGE WITH EVERY ISSUE OF TAXCONNECTIONS

 

Learn from tax advisors, straight to your inbox

Update My Email Address
Contact Us Today