What does PoS mean for the IRS? Ethereum’s Merge might result in an unexpected tax bill.
activity. The Merge heralds ramifications aplenty, but what of the potential tax implications to investors, traders and businesses alike? It’s doubtful anyone will be too pleased with a surprise tax bill — but that is, potentially, exactly what they’ll get.If we take a short trip down memory lane back to Bitcoin’s civil war in 2017, it eventually concluded in a split in the chain into Bitcoin and Bitcoin Cash . This event was coined — no pun intended — as a hard fork.
In the United Kingdom, an airdrop of ETHW is treated differently. According to the guidance, it can be inferred that no income tax is applied upon receipt. HM Revenue and Customs has gone one step further and provided some guidance on what it describes as a one-way transfer — citing the Ethereum mainnet to Beacon Chain upgrade. Its view is that section 43 of the Taxation of Chargeable Gains Act 1992 will apply to this scenario.
In the U.K., ETH staking and mining rewards are generally miscellaneous income and subject to income tax upon receipt and CGT on disposal. However, this also depends on the degree of activity, organization, risk and commerciality.In a hard fork, the mainnet blockchain becomes part of the newly merged blockchain. All smart contracts along with previous data move over. An Ethereum hard fork is unlike forks we've seen before.
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