Jarrett v USA - Tax treatment for crypto staking rewards

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The U.S. Internal Revenue Service (IRS) has doubled down on its stance that crypto staking is taxable, stating that tax liabilities arise as soon as staking rewards are received, Bloomberg reported.

This comes amid an ongoing legal battle with Joshua and Jessica Jarrett, a Tennessee couple staking on the Tezos network, who argue that staking rewards should not be taxed until sold.

In a Dec. 20 court filing, the IRS rejected the Jarretts’ claim that staking generates “new property” that should only be taxed when sold. The government said that “staking a cryptocurrency should induce a tax liability as soon as it is done,” denying the notion that staking tokens fall under the same category as crops, books, or manufactured goods.

The case, now being closely watched by the crypto industry, could have significant implications for how staking rewards across all proof-of-stake blockchains are taxed in the United States.
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