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Scenario $5$: Cryptocurrency Airdrops and Forks

Taxpayer received an airdrop of a new cryptocurrency valued at $$5,000$ at the time of receipt.

Later, owned cryptocurrency undergoes a hard fork, resulting in an equal amount of a new coin.

No sale of any cryptocurrency during the year.

Wages: $$85,000$

Interest Income: $$800$

Itemized Deductions: $$18,000$

Allowable deduction for self$-$employment tax: None

Questions:

Discuss the potential tax implications at the time of the airdrop and the hard fork.

Are there realized gains to report? How do you establish a cost basis?

This is an evolving area $-$ explore current IRS guidance on this topic.