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.
“The fair market value is determined as of the date and time the taxpayer gains dominion and control over the validation rewards.”
“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…
