Sometimes you don't even know you suddenly own a bunch of new coins because someone decided to fork bitcoin while you wasn't paying attention (because keeping track of all these damn forks is near impossible).
How do taxes work with forks?
What's funny is, in some countries is considered a crime not reporting quantities higher than a certain amount, a pretty big amount like let's say $500,000
Of if you are a bitcoin whale (im not but I wish) let's say you own 1000 BTC
Suddendly someone forks bitcoin, and now you own over $500,000 in some fork, and it would be considered a crime because you didn't report that.
It's pretty stupid but that's how laws work in some countries. I was wondering what are your thoughts in this.
How do taxes work with forks?
What's funny is, in some countries is considered a crime not reporting quantities higher than a certain amount, a pretty big amount like let's say $500,000
Of if you are a bitcoin whale (im not but I wish) let's say you own 1000 BTC
Suddendly someone forks bitcoin, and now you own over $500,000 in some fork, and it would be considered a crime because you didn't report that.
It's pretty stupid but that's how laws work in some countries. I was wondering what are your thoughts in this.
It's a pretty frustrating situation. Some tax consultants and CPAs have stressed that fork coins may be taxable whether or not you claim them or sell them. There was a recent thread that discussed the issue here.
As far as US taxpayers go, this seems to be the common take on fork coins: https://www.forbes.com/sites/greatspeculations/2017/08/04/how-to-report-bitcoin-cash-and-avoid-irs-trouble/#3d0f03b13066
Forks like Bitcoin Cash and Bitcoin Gold probably count as "other income" with a cost basis based on the value when markets launched. After that, normal capital gain/loss taxes apply. It's frustrating because claiming these coins comes with malware and privacy issues. And dealing with the smaller forks? The risks are even greater. So I'm curious how taxes might apply to smaller/riskier forks. I haven't seen many opinions on that.