To set the scene I made some investments in crypto way back in the day (2014/15) before the initial boom so despite the recent crypto winter my portfolio is still very much in the green.
I'm thinking about selling and the CGT rules are pretty straight forward for the BTC and ETH I bought, but what I'm struggling to make any sense of is how I treat all the free coins I've sold as a result of hard forks and air drops.
BTC Hard-forked to Bitcoin Cash (BCH) and Bitcoin Gold (BTG).
Bitcoin Cash further hardforked to BCHSV and BCHABC.
ETH hardforked to ETH Classic
Holding ETH resulted in free air drops of OmiseGO (OMG)
One of my cloud wallets ran a free promo and I received free Stellar (XLM)
I'm finding it very difficult to find any information on how these forks and air drops are treated for tax purposes. The ATO states that crypto is treated like property for taxes, therefore I'm thinking it would be logical to treat it as gifted property.
From what I understand gifted property is treated for CGT at the value gains after the contracted point of transfer. So for examples if you were gifted or inherited land that was worth $100k, and you later sold it for $150k, then you would be liable for CGT on the $50k only.
Now the interesting thing is that all these forked coins and air drops lost significant value since their initial fork, so I would be selling them far below what their value was at the point of transfer. Now even though they were free and I've made money out of this, does the fact that their value is less then when I received it mean that I have in fact made a CGT loss and can offset that against the CGT gains I get when I sell my main portfolio?
Cryptocurrency and tax – hard forks
That would be the position I would be looking to take.