I'm interested in forking a project released under a two-clause BSD license:

Copyright (c) 2010 {copyright holder} All rights reserved.

Redistribution and use in source and binary forms, with or without modification, are permitted provided that the following conditions are met:

(1) Redistributions of source code must retain the above copyright notice, this list of conditions and the disclaimer at the end. Redistributions in binary form must reproduce the above copyright notice, this list of conditions and the following disclaimer in the documentation and/or other materials provided with the distribution.

(2) Neither the name of {copyright holder} nor the names of its contributors may be used to endorse or promote products derived from this software without specific prior written permission.

DISCLAIMER

THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND ANY EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT OWNER OR CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE, DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.

I've never forked a project before, but this project is very similar to something that I need/want. However, I'm not sure how far I'll get, so my plan is to pull the latest from their repository and start working. Maybe, eventually, I'll get it to where I want it, and be able to release it. Is this the right approach?

How, exactly, does this impact forking of the project? How do I track who owns what components or sections (what's copyright me, what's copyright the original creators, once I start stomping over their code base)? Can I fork this project? What must I do prior to releasing, and when/if I decide to release the software derived from this BSD-licensed work?