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Non-Taxable Transactions: Soft Forks
Manage episode 390585077 series 3428825
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Soft forks are protocol changes to a blockchain (ETH to ETH 2.0 when The Merge occurs, for example) that remain compatible with previous versions and therefore do not create a taxable event. No new cryptocurrency is created in a soft fork. For now, just remember soft forks are not taxable, and we dive into the topic in much greater detail in the hard forks section of this book. Hard forks may or may not be taxable depending upon whether there is an accession to wealth. Receiving new cryptocurrency is an accession to wealth and is taxable; however, a hard fork that does not result in the transfer or airdrop of new cryptocurrency does not create taxable income.
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