Hard Fork & Airdrop

The Internal Revenue Service of the United States government has released guidance for U.S. taxpayers who gain dominion & control of virtual currencies (tokens) via an airdrop following a hard fork of a preexisting token. That guidance has been published online and may be reviewed here.

The use of the EthereumTaxDodgeball system may have tax implication for U.S. taxpayers.

The following actions are intended to be run in order.

Step One: Deploy and Distribute an ERC20 Token

A prospective blockchain administrator may use the EthereumTaxDodgeball system for the purpose of deploying an ERC20 token contract. This contract should be initialized with a list of two or more beneficiary U.S. taxpayer addresses.

Step Two: Hard Fork

An ERC20 token contract created through the EthereumTaxDodgeball system contains a provision which allows it to be paused and hard forked. When a hard fork takes place, a new contract is created which maintains references to the holders of the preexisting token and their respective balances.

Step Three: Add Liquidity for New Token

One may, for whatever reason, exercise dominion & control over one's ether by offering to buy a sum of newly hard-forked tokens. This may affect the fair market value of said tokens.

A taxpayer who has gained, and is aware of having gained, dominion & control of said tokens following an airdrop may accept said offer until it is rescinded.

Step Four: Airdrop

Token contracts which are created through a hard fork event via the EthereumTaxDodgeball system contain a provision to airdrop new tokens to holders of pre-hard-fork upstream tokens. An airdrop effectively grants dominion & control of tokens to taxpayers.

Step Five: Remove Liquidity (optional)

One who has made an offer to buy a sum of newly hard-forked tokens may, for whatever reason, provided the offer has not yet been taken, rescind said offer. This action may affect the fair market value of said tokens.