Taxpayer frequently interacts with numerous crypto platforms and exchanges. One of her cryptocurrency investments engaged in a hard fork as the result of wanting to create a new rule for the blockchain. She quickly realized her old version of the blockchain was outdated or irrelevant now that the new blockchain exists following the hard fork, which forced her to upgrade to the latest version of the blockchain protocol. As a result of the hard fork, her cryptocurrency followed with an airdrop where she received new virtual currency. What are her tax consequences if any?

Taxpayer has no tax consequence from the hard fork and airdrop.

Taxpayer has an increase in basis only from the hard ford and airdrop.

Taxpayer has ordinary income from the hard fork and airdrop.

Taxpayer has capital gains from the hard fork and airdrop.