The IRS has restated its position on the taxation of rewards from cryptocurrency staking, stating that these rewards are taxable income upon receipt.
This comes in response to a legal challenge from Joshua and Jessica Jarrett, who have been in a tax dispute with the agency since 2021. The IRS maintains that staking rewards should be reported as income at their fair market value as soon as they can be sold, exchanged, or disposed of. This aligns with the agency's broader interpretation of block rewards, which are considered income from the moment they are generated.
The Jarretts have filed a lawsuit seeking to have their staking rewards treated as property and taxed only upon sale. The outcome of this case could have implications for the taxation of staking rewards and may prompt the IRS to reevaluate its stance.