Bitcoin Cash poses potential tax headaches for every bitcoin owner at a irs guidance on bitcoin when the IRS is getting more aggressive about digital currency. 813 0 0 1 . 696 0 0 0 1.
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47 0 0 0 13 6. 5 0 1 0 6. 2847441 1 16 1 7. Bitcoin owners received a surprise this August when a parallel version of the currency, known as Bitcoin Cash, was distributed to every existing bitcoin owner on a one-to-one basis. 2,500—not as much as the original, but still a tidy chunk of digital change. Bitcoin Cash arrived quite literally as free money.
The windfall, however, poses potential tax headaches for every bitcoin owner at a time when the IRS is getting more aggressive about digital currency. Fewer people understand its offshoot, Bitcoin Cash. The forked version of bitcoin also replicated the original blockchain’s distribution of wealth: Anyone who had five bitcoins on the original chain, for instance, is entitled to five units of the new currency, Bitcoin Cash. Is an air drop akin to corporate dividend, which are taxed at lower rates? Or is it more like a share split?
If the latter, then no one owes Uncle Sam anything. It turns out Bitcoin Cash is probably neither of these things. L Gates, the IRS is likely to treat an air drop as ordinary income. 2014, which treats bitcoin and other digital currency as a form of property. When the Bitcoin Cash shows up in someone’s account, that’s probably a taxable event. The question is what’s it worth.