I agree. The IRS should simply mandate that forked coins have a purchase price of 0 USD. When sold, the tax event occurs and the seller simply pays the short term or long term realized gain.

They do have a purchase price of $0. That's exactly why it's taxable income.

If you had to pay market value for the forked coins they wouldn't be taxed when you received them.

Quickly, what's X*0?

I'm aware that there's situations where a CGT event occurs even without selling your asset, but this shouldn't be one of them.

It's not a capital gains transaction. It's a receipt of income transaction.

You receive crypto worth $X that you paid $0 for. Thus, you have $X in income and owe income taxes on that. If you paid $Y for the crypto, then you had $X-$Y in income (similar to in-the-money stock options). Your cost basis would be $Y in the $X of coins, so if you ever sell them, then your income is $Z (value at time of sale) less $Y in capital gains.

You would pay tax a second time, but only on the difference between the fork price and the price you sold for. They're not trying to double-tax you on the same money.