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In late Q2, 2021, FLR tokens will be distributed to the vast majority of XRP holders via airdrop. James Yochum, a Certified Public Accountant based in the United States, took to Twitter to explain how taxation norms could theoretically impact FLR’s airdrop to XRP holders.
Yochum said that FLR holders would face an unfair tax advantage. He claimed that FLR Airdrop was taxable, citing IRS Revenue Ruling 19-24.
He further added,
“This ruling is authoritative guidance for the same factual circumstances outlined in the ruling, which fits the same factual circumstance $FLR is airdropped.”
Flare Network, on the other hand, clarified that Yochum’s arguments contradicted the conclusions they sought from other US-based tax lawyers. They also advised holders to seek legal advice if they were interested.
Ripple’s CTO, David Schwartz, stated that the FLR decline would be taxable, and that Flare Networks should airdrop FLR as soon as possible to keep the artificial sale pressure at bay.
“This is why it’s so important as much FLR as possible be airdropped as early as possible. Otherwise, artificial selling pressure will be created by tax implications.”
Furthermore, Schwartz stated that it was impossible to make a rational case that an IOU to offer an asset in the future was worth the same as the current asset.
Following that, the Flare network stated that they would provide some general advice following legal analysis.
Reverting to Schwartz, they further added,
“The analysis of professionals we have engaged in this area leads to different conclusions to the ones you are drawing.”
Without doing an ICO, FLR coins can be distributed and network usage can be incentivized using the Flare XRP airdrop. FLR coins will be airdropped in batches and XRP holders would be the initial beneficiaries of the same. Flare’s CEO, Hugo Philion, however, refused to comment on the same.