Crypto staking rewards are taxable once received: IRS

cointelegraph.com:

United States crypto investors must report crypto staking rewards as gross income in the year it was received, according to a new ruling from the country’s top tax authority.

On July 31, the Internal Revenue Service (IRS) issued Revenue Ruling 2023-14, giving clarification about how income earned from staking digital assets should be treated for taxation purposes.

Gross income includes income realized in any form, whether in money, property, services and now staking rewards.

The ruling applies to cash-method taxpayers who receive any crypto as remuneration for validating transactions on proof-of-stake blockchains and applies both when staking cryptocurrency directly and when staking through a centralized crypto exchange.

The ruling stated that the fair market value of the crypto rewards should be included in annual income and determined when the assets are received.

“Dominion” was defined as the time when the investor controls and has the ability to sell, exchange, or otherwise dispose of the cryptocurrency rewards.

The IRS previously subjected crypto-mining rewards to both income and capital gains tax but had no provisions for staking rewards up until now, according to crypto tax firm Koinly.

Messari founder Ryan Selkis said the IRS is treating crypto staking like stock dividends.

What PoS blockchains do at scale is embed state-level taxes into their protocols.The IRS says PoS rewards should be included in gross income, which means crypto has taken the concept of a "stock dividend" and made it taxable.You get a taxed for slicing a pizza in 10 vs. 8. pic.twitter.com/3qlm6lAGQv

Meanwhile, Jason Schwartz, tax partner and digital assets co-head at Fried Frank said: “While the ruling is therefore unsurprising, it’s still