US tax question. Scenario: You own shares of a company that does a stock split every day. Rules are that if you don't sign a document to accept your new shares, you forfeit them, taking dilution. Would the IRS see signing as an income-generating act, new shares taxed on delivery?
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Probably the signature is not contemporaneous with receipt of the newly-created shares. With this hypothetical we do not see the ordinary “pro rata” accounting for change of cost basis in property held by members of the common enterprise equitably, we see individual choice+action
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I dont think it gets treated as income as when the split happens the cost basis is rebased
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That’s how ordinary splits are taxed, but here we have a hypothetical requirement for the taxpayer to take an action.
The issuer is receiving something of non-zero economic value (a signature on a document from a shareholder) and in return the shareholder takes future possession
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Guessing you're trying to think about how a company doing stock splits is like a proof-of-stake chain paying out rewards?
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Proof-of-stake rewards might not be “paid” those new shares might be “taxpayer-created property” taxed on sale not the FMV at the moment the taxpayer created them.
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I could be wrong. But IIRC It’s a wash, there is no net gain or loss at the time of split.
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0.0001 sec later ….20% pump 😅
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