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US IRS wants to tax cryptocurrency staking
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The IRS, the United States Internal Revenue Service, reiterated this week its intention to tax rewards obtained through cryptocurrency staking.
The agency responded to a lawsuit filed by Joshua and Jessica Jarrett. The couple in question challenged the decision to tax these rewards upon receipt.
According to the IRS, investors must report staking rewards as income in the year they receive them, as per the Revenue Ruling 2023-14.
The rule requires taxpayers to include the rewards in gross income, valuing them at fair market value as soon as they are able to sell them or exchange them. The IRS reaffirmed this position in an official statement.
Staking and the Jarrett case
Staking is a process where investors lock their cryptocurrencies in smart contracts to support blockchain operations such as transaction validation and network security. In return, they receive rewards, making staking a popular way to generate passive income.
The case has gained attention since 2021, when the Jarretts sought a refund of $3,293 paid in taxes on 8,876 Tezos tokens received through staking in 2019.
They argued that the tokens should not be taxed until sale. Although the IRS initially offered a refund, the couple declined, seeking legal precedent for the issue.
In August 2023, the Sixth Circuit dismissed the case after the IRS issued a full refund. However, the Jarretts presented a new lawsuit in October, reinforcing its stance against immediate taxation of rewards.
The IRS decision comes as the cryptocurrency industry celebrates important changes to the US regulatory landscape. THE re-election of Donald Trumpwhich is seen as favorable to the sector, and the resignation of Gary Gensler, former SEC chairman known for his strict stance against digital assets, generated optimism in the market.
US IRS wants to tax cryptocurrency staking
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US IRS wants to tax cryptocurrency staking
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US IRS wants to tax cryptocurrency staking
