The IRS recently clarified its guidance in Rev. Rule 2019-24, noting that taxpayers must pay income tax on new coins they receive after a transaction in which one cryptocurrency splits into two – known within the industry as a “hard fork.”
When new coins are distributed due to a hard fork to multiple users, the IRS terms such distribution in the hard fork an “airdrop,” although the industry typically uses “airdrop” to describe a situation in which a company provides free tokens to existing holders of a specific cryptocurrency as part of a promotion.
IRS Office of the Associate Chief Counsel attorney Christopher Wrobel reportedly said that this rule does not apply to promotional airdrops and that the agency has not yet decided if airdrops are taxable.