I recently got back in crypto after several years. Apparently, I received BCH from the Bitcoin fork in August 2017. Based on the more recent guidance from the IRS, forks should be taxed as income when received. (This part of the guidance is somewhat absurd imo, but I want to try my best here…)
I sold the BCH in 2020 so now I need to figure out how to claim the earnings.
I think the easiest way is to simply change cost basis of the fork to zero and claim all earnings the year of the sale. This would tax the earnings as a long term capital gain.
A second way may be to claim the fork as received the same date of sale, which would tax the earnings as income in 2020.
The third way would be to match the latest guidance, which would keep the cost basis as what Koinly states but may require the 2017 tax return to be amended. (I am not sure I can even amend a tax return from 2017).
Thoughts?
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