IRS Declares Crypto Staking Rewards as Taxable Event
Adekunle Joshua
United States crypto investors must report crypto staking rewards as gross income in the year it was received, according to Revenue Ruling 2023-14 issued on July 31
The ruling clarifies how income earned from staking digital assets should be treated for taxation purposes
Gross income includes staking rewards, whether received as money, property, or services
The ruling applies to cash-method taxpayers who receive crypto as remuneration for validating transactions on proof-of-stake blockchains. It's relevant for both direct staking and staking via centralized exchanges
The fair market value of the staking rewards should be included in annual income and determined at the time of receipt
"Dominion" over the rewards is achieved when the investor can sell, exchange, or dispose of them
IRS is treating crypto staking like stock dividends, as noted by Messari founder Ryan Selkis. This means staking rewards are now subject to income taxation
Until now, the IRS subjected crypto-mining rewards to income and capital gains tax but had no provisions for staking rewards. This ruling closes that gap.