Hard fork
Also known as: fork, chain split
A permanent split of a blockchain into two chains, sometimes giving holders new coins on the new chain with tax consequences.
Definition
A hard fork is a backward-incompatible change that splits a blockchain into two. Holders of the original coin may receive an equivalent balance of a new coin on the forked chain. Receiving new forked coins can be treated as income at their value on receipt, and that value becomes their base cost. Treatment varies by jurisdiction and by whether the new coin has a market when received.
Example
After a hard fork you receive new coins on the split chain. Their rand value on receipt may be income, and it becomes the base cost for any sale.
Jurisdiction notes
- South Africa: Coins from a hard fork can be revenue income at value on receipt; treatment depends on whether a market exists at that time.