- The U.S. Internal Revenue Service (IRS) has come out with a proposal to tax steaking rewards.
- All profits earned from using the Proof-of-Stake service must be included in the annual income statement.
- The detailed terms are spelled out in Revenue Ruling 2023-14.
The U.S. Internal Revenue Service (IRS) intends to impose a tax on investors who receive rewards for steaking cryptocurrencies. The nation’s top tax authority issued Revenue Ruling 2023-14, which clarifies in detail the process for taxing individuals who earn money by steaking digital assets.
In particular, the IRS proposes to treat steaking rewards as income requiring reporting. It should be included in the annual income statement, the IRS says.
“The fair market value of Proof-of-Stake validation fees received is included in the taxpayer’s gross income. The accounting must be done from the time the U.S. taxpayer obtained control of the tokens,” the ruling said.
The rule applies to investors using a steaking service on cryptocurrency exchanges and any other platforms.
Messari founder Ryan Selkis suggested that the IRS may view cryptocurrency-stacking as a “stock dividend.”
In the meantime, the SEC continues to maintain that all PoS tokens are securities. To settle the controversy, the Kraken exchange shut down its Proof-of-Stake program for U.S. users.
Back in January, the IRS proposed that income from mining, staking and airdrops, as well as gifts of digital assets, be reported on returns if their total value exceeds the recipient’s annual income. In March 2023, the IRS was considering imposing a tax on NFTs.
March 2023.