American Bar Section on Taxation Makes Hard Fork Recommendations To IRSbr>
The American Bar Association’s Section on Taxation has recommended some changes for the Internal Revenue Service (IRS) regarding the way hard forks are taxed. Although the recommendations do not represent an ABA-approved position, the proposals indicate a general attitude that likely will move the IRS toward adoption of new rules.
In a letter dated March 19 and addressed to acting IRS commissioner David Kautter, the ABA Section on Taxation noted that there is a question on whether a hard fork that results in a new coin being created represents income for tax purposes. If so, how much and when are the key issues that need to be addressed.
The section proposed a temporary solution, offering a safe harbor for 2017 to those taxpayers who were able to transact in a forked coin as a result of any fork occurring during the 2017 tax year.
“While the Section has not concluded that this is the proper U.S. federal income tax treatment of Hard Forks, we believe that such temporary solution represents reasonable interpretation of current law. In addition, we believe that the temporary solution imposes a reasonable administrative burden on the Service and compliance burden on taxpayers in this filing season, as it avoids difficult timing and valuation issues.”
The Section said it would continue to comment on IRS matters on cryptocurrency.
Read the full letter here.