Taxing Blockchain Forks

27 Pages Posted: 8 Nov 2019

See all articles by Mattia Landoni

Mattia Landoni

Federal Reserve Banks - Federal Reserve Bank of Boston

Gina C. Pieters

University of Chicago - Department of Economics; Cambridge Centre for Alternative Finance

Date Written: October 25, 2019

Abstract

The tax treatment of cryptocurrency forks presents four unique challenges: parent/child designation, taxpayer access to the new token, assessment of fair market value, and assessment of comparable contemporaneous fair market values. We provide empirical evidence that each of these issues is a hurdle in determining whether income has been realized, or in apportioning the basis. We consider three existing approaches for assets acquired without a purchase. We conclude that the least problematic approach (adopted by Japan) is giving zero tax basis to the new coin and taxing the proceeds upon a sale, while treating the new coin as realized income (as recently ruled in the US) is the most problematic.

Keywords: taxation, cryptocurrency, fork, split, blockchain, distributed ledger

JEL Classification: H20, H21, H24, H29

Suggested Citation

Landoni, Mattia and Pieters, Gina C., Taxing Blockchain Forks (October 25, 2019). SMU Cox School of Business Research Paper No. 19-18, Available at SSRN: https://ssrn.com/abstract=3475598 or http://dx.doi.org/10.2139/ssrn.3475598

Mattia Landoni

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Gina C. Pieters (Contact Author)

University of Chicago - Department of Economics ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Cambridge Centre for Alternative Finance ( email )

10 Trumpington Street
Cambridge, CB21QA
United Kingdom

HOME PAGE: http://https://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
95
Abstract Views
883
rank
301,675
PlumX Metrics