How the IRS Taxes Airdrops and Hard Fork Coins
Crypto you receive for free through an airdrop, or new coins created by a hard fork, aren't tax-free — the IRS addressed this directly in Revenue Ruling 2019-24. The moment you gain "dominion and control" over the new coins (typically when they show up in your wallet or exchange account), their fair market value at that moment counts as ordinary income for the year. That same value then becomes your cost basis for the coins going forward, so you're not taxed twice on the same value — you're taxed once as income when you receive it, and again only on any additional gain when you sell.
This calculator first multiplies the quantity you received by the fair market value at receipt to get your ordinary income, then applies your ordinary income tax rate to estimate the tax due for that year. When you enter a sale, it uses that same per-coin value as your cost basis, subtracts it from your sale proceeds to find your capital gain, and applies your capital gains rate — short-term (taxed as ordinary income) if held a year or less, long-term (typically 0/15/20%) if held longer — to estimate the tax on the sale itself.
Crypto tax rules continue to evolve, and your exact tax rate depends on your total income and filing status. This calculator is a simplified planning estimate based on current IRS guidance; for an accurate filing, check the latest IRS rules and consider consulting a tax professional, especially for larger amounts.
Frequently Asked Questions
Yes. Under IRS guidance (Rev. Rul. 2019-24), crypto received via airdrop or hard fork is taxed as ordinary income at its fair market value on the date you gain control of it — even before you sell.
The value you were taxed on at receipt becomes your cost basis. When you sell, you owe capital gains tax on the difference between your sale price and that basis — short-term rates if held one year or less, long-term rates if held longer.
Use your marginal federal ordinary income tax rate for the income at receipt, and the applicable short-term or long-term capital gains rate for the sale. Since rates depend on your total taxable income, check current IRS brackets or consult a tax professional for your exact rate.