Many coins are now doing relaunches where they abandon the original contract for whatever reason and then start a new contract and airdrop holders of previous contract equivalent coins. A good example of this is Floki. They launched Floki V1 on ETH, then decided to do a V2 on ETH, and then a V3 on ETH which is the current version (there is also a BSC version but not the topic of this post). This situation is also similar to MCC and several others that have relaunched on new contracts.
For Floki V1 to V2 they asked V1 holders to send tokens to a certain address by a deadline. Everyone that did received equivalent V2 tokens airdropped to them. For V2 to V3 they just pulled LP from V2 at the end date and then gave V2 holders equivalent V3 tokens again via airdrop.
I held through both of these relaunches and am trying to figure out how to do the taxes.
End of V1: V1 tokens were sent to a wallet that I cannot access so is that just a sent with nothing in return transaction, so a “loss” equivalent of all cost basis of the V1 coins?
Beginning of V2: V2 coins were airdropped so is that treated as “income” equivalent to the airdropped coins’ value on V2 launch day one? Would this be the beginning of the launch or when I received them that day? This will vary in value wildly as the coin grew rapidly on day one.
End of V2: V2 tokens were just left in place in my wallet but have zero value and are not able to be sold. Not sure how to handle this?
Beginning of V3: V3 coins were airdropped so is that treated as “income” equivalent to the airdropped coins’ value on V3 launch day one? Would this be the beginning of the launch or when I received them that day? This will vary in value wildly as the coin grew rapidly on day one.
Any thoughts on what to do with this scenario?