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ARTICLE · 23 AUGUST 2023

IRS Holds That Crypto Staking Rewards Are Taxable Income

Hogan Lovells Cadwalader
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The Internal Revenue Service ("IRS") recently issued guidance in Revenue Ruling 2023-14, holding that taxpayers who stake their cryptocurrency and receive additional...

United StatesTechnology
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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The Internal Revenue Service ("IRS") recently issued guidance in Revenue Ruling 2023-14, holding that taxpayers who stake their cryptocurrency and receive additional units of cryptocurrency as rewards when validation occurs must include the fair market value of the validation rewards received as gross income.

This long-anticipated ruling addresses an issue that was recently before a federal appeals court in Jarrett v. U.S. In Jarrett, the taxpayers sought a refund on crypto staking rewards that they had previously included as income on their 2019 tax return under the theory that staking rewards are newly-created property and are only taxable when disposed of, not when received.

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