Ask an AI Accountant

Determining your basis in cryptocurrency received following a hard fork can be tricky. The IRS has provided some guidance on this topic in Revenue Ruling 2019-24. According to the ruling, if you receive new cryptocurrency after a hard fork, and you have the ability to dispose of the new cryptocurrency (i.e., you have dominion and control over it), then the new cryptocurrency is considered taxable income. The fair market value (FMV) of the new cryptocurrency at the time you gain dominion and control over it is included in your gross income. Your basis in the new cryptocurrency will be the FMV at that time. You'll need to convert the FMV from cryptocurrency to U.S. dollars based on the exchange rate available when you gained dominion and control. Please keep in mind that these rules can be complex and subject to interpretation. It's essential to maintain accurate records of your cryptocurrency transactions and consult a tax professional if you're not confident about your specific situation.