A critical note here is the coins' value when you receive them. A new coin might be forked from Bitcoin, with the developers stating it has a certain value. However, just because the creators state this doesn't mean the airdropped crypto was worth it—it is worth whatever its fair market value was on that day because it is no longer Bitcoin, and cryptocurrency creators of non-security tokens do not dictate market value. A security token would likely be issued with a value because you're buying an asset being issued like a stock. 2. Selling cryptocurrency To illustrate, if your digital wallet held 50 units of cryptocurrency M with a fair market value of US$100, and after a "hard fork" you held 50 units of cryptocurrency N with a fair market value of US$100, you did not have any accession of wealth and consequently there would be no gross income to recognize. You would have the ability to buy or sell all 50 units of cryptocurrency N, but your US$100 basis has not changed.
Reporting crypto taxes is more challenging than you may think. Many people don’t realize the tax burden they’re creating with their crypto activity. Meanwhile, the IRS has been cracking down on cryptocurrency taxes for years, so it’s important to understand how they work. Calculate Your Crypto Taxes Calculating how much cryptocurrency tax you owe in the U.S. is based on how long you’ve held the assets prior to disposing of them, as well as which income tax bracket you fall under.