IRS again insists cryptocurrency staking is taxable in lawsuit

PANews reported on December 24 that according to Bloomberg, the U.S. Internal Revenue Service (IRS) once again insisted that cryptocurrency staking is taxable, stating that staking rewards will create tax liabilities once received. The news comes amid legal battles between Tennessee couple Joshua and Jessica Jarrett and the Internal Revenue Service over mortgage tax issues. The couple, who are staking on the Tezos network, argued that staking rewards should not be taxed until sold.

In a Dec. 20 court filing, the IRS rejected the Jarretts’ claim that the pledge created “new property” that would only be taxable upon sale. The government said, “Once the pledge of cryptocurrency is completed, there shall be immediate tax liability”. The case is currently being closely watched by the cryptocurrency industry and could have significant implications for how staking rewards are taxed on all proof-of-stake blockchains in the United States.

According to guidance issued by the IRS in 2023, block rewards obtained from staking or mining are considered taxable income when generated, and tax liability is based on its market value at the time of generation.