“Staked” cryptocurrency value may no longer be taxed as income
A recent settlement offered to taxpayers who filed a suit against the IRS may indicate a change in how staked cryptocurrencies are taxed. Previously, staking income was thought of, and treated similar to, interest income. Many crypto exchanges were handling it like that as well. However, a recent court ruling concedes that rewards gained from staking may not be considered income at the time it is earned, only when the coin is actually sold. As such, income taxes would not be due on the staked value unless and until it is sold.
The agency has not published any formal statement or otherwise indicated whether this settlement offered to a single plaintiff is a sign of a broader policy shift. For most traders with staking income, it will be nominal (less than $1,000), but for others it could be enough to merit closer inspection. Contact a ShindelRock tax professional for assistance.