Hard Fork Income

A hard fork occurs when a blockchain network splits, often resulting in the creation of a new token. If an investor receives the new tokens as a result of holding the original ones, this is often treated as taxable income.

The tax basis for the new tokens is usually the market value at the time they become tradable or are received. This event is unique because it creates a new asset without a direct purchase transaction.

Investors must track the receipt date and value to properly report the income and establish a cost basis. The volatility of post-fork tokens makes this valuation particularly challenging.

Like other forms of protocol income, this must be integrated into the broader tax reporting strategy.