A soft fork is a backward-compatible change to a blockchain's rules that does not create a new coin, so it has no tax consequence for holders.
Nodes that have not upgraded still recognize blocks produced under the new rules, so the chain does not split and no new token is issued. Bitcoin’s SegWit and Taproot upgrades were soft forks.
Revenue Ruling 2019-24 addresses hard forks, which can produce new tokens and income. A soft fork produces nothing to report; confusing the two leads to phantom income on returns. Compare a hard fork.
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