Forks, coinswaps, and renamed tokens - how should you handle these? Let's take a look at each one.
What is a Fork?
A fork (also known as a hard fork) is when a new project is created from an existing cryptocurrency project, and the two projects diverge. Typically, it is because the consortium running the project cannot agree on changes to the protocol underlying the network, and a new branch of the project with the new rules is created. Examples of famously created forks include ETC that forked from ETH, and BCH and LTC which forked from BTC.
Holders of the underlying coin, such as ETH in the case of the ETC hard fork, receive an equal number of the new coins that are minted as a result of the fork. If you had one ETH at the time of the hard fork, you received an airdrop of one ETC.
In ZenLedger, you can mark the airdrops from hard forks as fork by using the down arrow on the right side of the incoming transaction to select the designation. This will both give the transaction a basis, and correctly report the coin as Schedule 1 taxable income.
What is a Token or Coin swap?
A tokenswap, or mainnet swap, is when a coin that was previously a project on one blockchain, such as Ethereum's ERC-20 protocol, moves to its own blockchain and the former token is invalidated. Most mainnet swaps involve sending the old token out to a wallet address and then receiving the new tokens into a wallet that uses the new protocol. Many blockchains have started from Ethereum's network, including EOS, NEO, and VEChainThor, and now have their own tokens.
Most token swaps are 1:1 and are correctly shown in ZenLedger as an outgoing of the underlying token and an incoming of the new token. If they are a 1:1 swap, the new coin is your new cost basis and is essentially a new position in the coin, according to the latest IRS guidance.
Some tokenswaps, most famously the 1:100 VEN to VET, are not 1:1. Correctly showing this in ZenLedger is to fully import both sides of the swap. The outgoing VEN is a taxable event. The incoming 100 VET you've received for each 1 VEN you sent out is your new token and cost basis in the coin. You do not need to do anything for tokenswaps to be properly represented in ZenLedger.
What do I do when a token is renamed?
If you have a token that has been renamed, such as SJCX to STORJ, you can edit the older transactions to match the ticker symbol on the newer transactions by clicking the edit dropdown to the right of each of the OLD coin's transactions and editing the name to match up with the new coin.
If you have questions, please reach out to our Customer Support team and we'll be glad to help!