How to calculate gains on a token received in a fork
Your gain is what the sale brought in minus the fair market value at receipt, which becomes your cost basis and starts the holding period for that token.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20263 min readFact-checked
On this page
- Control is what triggers income, usually when tokens become claimable.
- Fair market value at receipt becomes your cost basis.
- The holding period starts at receipt, not at the original purchase.
A hard fork splits a blockchain in two, and people holding the original coin often receive tokens on the new chain. Those tokens can create a tax bill, so the records you keep matter.
What you need before you start
The IRS treats forked tokens as ordinary income when you gain control of them. Control usually means the day you can claim, move or spend the tokens. Your holding period starts then, not when you bought the original coin.
How do you calculate the gain?
The gain on a sale is what the tokens brought in minus the fair market value you counted as income when you received them. That same value becomes your cost basis, so those dollars are not taxed twice.
- 1Find the receipt dateUse the day you first had control, usually when the tokens became claimable or were credited.
- 2Write down the amount and valueRecord how many tokens arrived and their fair market value in US dollars on that date.
- 3Keep your sale recordsWhen you sell, note the date, the dollars received and any fees.
- 4Subtract basis and feesSubtract your cost basis and selling fees from the proceeds. What is left is a capital gain or loss.
What records should you keep after?
If you did not claim the tokens or did not have control of them, the income may not be reportable yet. Once you do have control, keep your records together.
Frequently asked questions
Usually yes, if you had control of the tokens, because the income is set when you can claim or move them.
Look up that date's price and add the figure to your records now.
Report the value at receipt as ordinary income for the year you gained control. Then report the sale on your capital gains schedule with that value as the basis.
The IRS applies the same control test, so the value at receipt is income and sets your basis.
