How should the MTGOX repayment be reported to IRS and taxed?
Assuming the creditor has chosen to be repaid in BTC/BCH, he will receive BTC, BCH and cash. My understanding which is propably wrong, hence this thread, of how each of the 3 (BTC, BCH, cash) should be taxed:
BTC Since BTC held at MTGOX was not exchanged for other crypto or sold for fiat, BTC repayment is not taxable.
IRS treats BTC as property. Since we are dealing with civil rehabilitation repayment, which is a type of bankruptcy proceeding specific to Japan's legal system, it would help to establish if/how property recovered in a bankruptcy case is taxed.
BCH Since BCH was a hard fork, it is taxable as income. "To determine when [hard fork] tokens are actually ‘received,’ the IRS defines this as when the transaction is ‘recorded on the distributed ledger’, and allows you to have control over the crypto asset such that you are able to sell, transfer or otherwise dispose of it."
Cash We have to figure out what the cash payment is for before we can determine its tax treatment. The term "Non-Allotment Portion of BTC Claims" is used by the Tokyo Court to describe cash portion of the repayment.
Is it the market value of BTC when MTGOX became insolvent in 2014? Is "Non-Allotment Portion of BTC Claims" payable to creditors who filed the original bankruptcy claim, the one that preceded the civil rehabilitation claim?
OR
Is "Non-Allotment Portion of BTC Claims" delay damages, interest on the claim?
Any information would be appreciated.