I don't see how the IRS could coherently distinguish between these two cryptocurrencies and treat the sale of one as a long-term gain but a sale of the other as a short-term gain.
It's trivial to distinguish between the two. One has existed for several years and the other came into existence in 2017. One goes by the name Bitcoin or Bitcoin Classic, and the other by the name Bitcoin Cash. Legally and for tax purposes, the technical underpinning of the currencies is irrelevant...
The sale of Bitcoin Classic could be long-term gain because it could be held for >1 year (the threshold for LTG). The sale of Bitcoin Cash is short-term gain (for the 2017 tax year) because it came into existence in 2017.
Note that Bitcoin Cash should not be treated as a stock split for capital gain purposes--generally you would not get to share the basis of your Bitcoin Classic holdings with your Bitcoin Cash holdings. You can do that with stock because tax-rules specifically provide this option for stock and equity ownership interests. Bitcoins aren't equity ownership interests, they're assets. If you acquired Bitcoin Cash through the fork, you received free assets, and you're taxed on it as if you received free money.
>It's trivial to distinguish between the two.... One goes by the name Bitcoin or Bitcoin Classic, and the other by the name Bitcoin Cash.
My comment about distinguishing was not about Bitcoin Cash, but about the following counterfactual:
>What if the SegWit2x fork had happened, and each of the two resulting cryptocurrencies had roughly equal market cap and each claimed to be the "true" Bitcoin?
In this hypothetical situation, there is (by assumption) real disagreement about which of the two cryptocurrencies is the "real" Bitcoin, and I don't see how the IRS would be equipped to decide this contentious issue. And if it doesn't make such a decision, then the only remaining possibility is to treat the two chains equally.
I still don't know what you're saying. The IRS doesn't care which one is the true Bitcoin...it's going to treat coins held on each blockchain as separate assets...
It's trivial to distinguish between the two. One has existed for several years and the other came into existence in 2017. One goes by the name Bitcoin or Bitcoin Classic, and the other by the name Bitcoin Cash. Legally and for tax purposes, the technical underpinning of the currencies is irrelevant...
The sale of Bitcoin Classic could be long-term gain because it could be held for >1 year (the threshold for LTG). The sale of Bitcoin Cash is short-term gain (for the 2017 tax year) because it came into existence in 2017.
Note that Bitcoin Cash should not be treated as a stock split for capital gain purposes--generally you would not get to share the basis of your Bitcoin Classic holdings with your Bitcoin Cash holdings. You can do that with stock because tax-rules specifically provide this option for stock and equity ownership interests. Bitcoins aren't equity ownership interests, they're assets. If you acquired Bitcoin Cash through the fork, you received free assets, and you're taxed on it as if you received free money.