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ARTICLE · 13 APRIL 2021

Front Page Story And Back Page Correction: IRS Clarifies Its Public Cryptocurrency Position In Internal Guidance

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An airdrop occurs when a person delivers free cryptocurrency to a custodial account.

United StatesTechnology
Mark Leeds
Mark Leeds
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In Revenue Ruling 2019-24, the US Internal Revenue Service ("IRS") ruled that a holder of cryptocurrency who experienced a hard fork followed by an airdrop (in which the new currency emerging from the hard fork was distributed) had taxable income equal to the value of the currency received. My bitcoin-savvy friends thought the rule was gibberish because hard forks and airdrops have nothing to do with one another. In a you-know-what-I-meant IRS Chief Counsel Memorandum, dated March 22, 2021, the IRS corrected the nomenclature that it used in Revenue Ruling 2019-24. ILM 202114020 also provides further guidance on airdrops.

I.  Once Again, a Tax Lawyer Attempts to Explain Aspects of the Cryptocurrency Market

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