In a recent post about the Jarrets, a couple from Nashville, TN who received a favourable ruling in a case about crypto staking taxes, the community believed that a precedent might have been set.
That’s because the IRS has ruled a full refund of the paid taxes, which seemed like an amazing precedent and gave hope to hundreds of thousands of stakers in the United States and elsewhere.
However, as it now turns out, that might not be the case.
This simply looks like a case of the state not wanting to fight this specific battle over a measley $3,000 tax refund, and deciding to just let it go, says Omri Marian, a professor of law and academic director of the Graduate Tax Program at the University of California.
The government lawyer overseeing the matter probably thought, “I am so constrained for time and recourses. I have thousands of active cases. I am not going to spend office time and money fighting in court over a $3,000 refund.
That’s all. Neither a court nor the IRS decided anything, except that the agency could make better use of its time.
Says Omri Maran in his CoinDesk Insights report.
State Of Crypto Staking Taxes In USA
The current United States taxation policy for unsold staking rewards remains somewhat unclear though.
It actually doesn’t mention crypto staking at all. However, it does mention crypto mining. It says that mining rewards are in fact taxable on the day it has been earned, even if unsold.
That means that if we apply the same logic to crypto staking rewards, they would in fact be taxable. The current case is arguing that should not be the case though, as staking rewards are a “newly created asset”, and therefore should not be taxed until it is sold or an exchange of value occurs.
Despite still not having an exact legal framework for crypto staking taxes in the United States, with the rate that the industry is growing, we expect the IRS to publish more information in the next year at most.
Several organizations are attempting to lobby regulators to treat staking rewards differently than mining rewards, to avoid accumulation being taxed. Whether they succeed remains to be seen.