The IRS finally answered how hard forks and airdrops are taxed
Revenue Ruling 2019-24 settled two questions that had been open since 2014: what a hard fork does to your taxes, and what happens when new coins land in your wallet. Here is what it says and how it applies to a 2026 return.
A hard fork or an airdrop can put a coin in your wallet that you never bought. For years it was unclear whether that counted as income, and if so, how much. In October 2019 the IRS answered with Revenue Ruling 2019-24 and a companion set of FAQs, its first substantive crypto guidance since Notice 2014-21 back in 2014. That ruling still governs how forks and airdrops are taxed on a 2026 return.
The short version: receiving nothing after a fork is not income, and receiving new coins you can actually use is. The detail lives in what counts as receiving. Informational, not tax advice.
What a hard fork and an airdrop actually are
A hard fork happens when a blockchain's software changes in a way that splits the chain in two. Sometimes the split produces a brand new cryptocurrency that runs on its own ledger. The Bitcoin Cash split from Bitcoin in 2017 is the example most people remember.
An airdrop is a distribution of cryptocurrency units to many wallet addresses at once, often for free and often after a hard fork. If a fork creates a new coin and that coin shows up in your wallet, an airdrop is usually how it got there.
The ruling treats these as two separate events, and the tax result depends on which one actually happened to you.
The two situations the ruling covers
When new coins count as received
The trigger for income is not the moment a fork happens. It is the moment you can do something with the new coins. The ruling ties receipt to when the transaction is recorded on the distributed ledger and you can transfer, sell, exchange, or otherwise dispose of the coins. That is what the IRS calls dominion and control.
The distinction matters when a coin appears before you can touch it. If an exchange does not support a forked coin until a later date, you have not received it for tax purposes until the exchange lets you move or sell it. Income is measured on that later date, using the value then, not the value on the day of the fork.
The number that goes on your return
When you receive airdropped coins with dominion and control, you report ordinary income equal to their fair market value in U.S. dollars at that time. If 10 coins hit your wallet when each is worth $30, you have $300 of ordinary income for that year.
That $300 also becomes your cost basis in the coins. When you later sell or trade them, your capital gain or loss is the sale price minus that basis. Sell all 10 for $500 and you have a $200 capital gain on top of the $300 you already reported. The clock for long-term versus short-term treatment starts the day you received them.
Untangling which coins are income and what they were worth on the day they arrived is the part people get wrong. We'll match you with a pro who does it every season.
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- The date and time you gained control of the new coins.
- Their fair market value in U.S. dollars at that moment, and the source you took the price from.
- Which fork or airdrop produced them, and the wallet or exchange they landed in.
- Whether the coins were locked or unsupported at first, and the date that changed.
How this looks on a 2026 return
Every Form 1040 still asks whether you received, sold, or otherwise disposed of a digital asset during the year, and airdropped coins count. The ordinary income from an airdrop belongs to the year you had control of the coins. A later sale is reported separately as a capital transaction on Form 8949 and Schedule D.
Broker reporting has caught up since 2019. Exchanges have started issuing Form 1099-DA, so the IRS increasingly has its own record of what moved through your accounts. Revenue Ruling 2019-24 has not been replaced, so its two answers on forks and airdrops still control.