A fork happens when a blockchain network upgrades, creating a new version of the chain that shares the same transaction history as the original up to the fork point. How you handle a fork in CoinTracker depends on the type.
- Soft fork: A soft fork involves updates to the protocol that remain compatible with older versions. It modifies the existing blockchain without creating a new one or invalidating the previous version. You usually don't need to do anything in CoinTracker after a soft fork.
- Hard fork: This happens when a blockchain’s code is changed, resulting in a new cryptocurrency while the original continues independently. This creates blockchain branches. For example, the split between Bitcoin and Bitcoin Cash is a hard fork.
Using the Fork category for Hard forks
Depending on how the hard fork was executed:
- If a Receive transaction exists for the forked asset, change its category to Fork on the Transactions page. You can then review forked transactions by tax year on the Taxes page, alongside your tracked capital gains.
- For a hard fork where no clean Receive transaction exists, manually accounting for the forked balance can be complex and depends on your tax jurisdiction. We recommend working with a tax professional to set up the right transactions in your account before filing.
Disclaimer: This information is for informational purposes only and should not be considered legal, tax, or financial advice. Please consult a tax professional for specific guidance. Please see our full disclaimer.