The United States Internal Revenue Service (IRS) has issued a ruling that clarifies the taxation of cryptocurrency staking rewards. According to Revenue Ruling 2023-14, released on July 31, 2023, crypto staking rewards must be reported as gross income in the year they are received.
Details of the Ruling
The ruling specifically applies to cash-method taxpayers who receive cryptocurrency as rewards for validating transactions on proof-of-stake (PoS) blockchains. This includes both direct staking of cryptocurrency and staking through centralized crypto exchanges.
The IRS defines dominion as the time when the investor controls and has the ability to sell, exchange, or otherwise dispose of the cryptocurrency rewards. The fair market value of the crypto rewards should be included in annual income and determined at the time the assets are received.
Background and Implications
Cryptocurrency staking is a process where individuals…
