The US Internal Revenue Service (IRS) claims that winnings from crypto bets are taxable before the participant redeems them.
The parastatal government has reiterated that cryptocurrency staking does not constitute new ownership. Therefore, crypto enthusiasts who stake their assets should be fully accountable and pay taxes when staking.
A Bloomberg A report Tuesday outlined the IRS’s stance in an ongoing lawsuit between the agency and a U.S. couple. For comparison, Joshua Jarret and his wife Jessica Jarret filed a lawsuit against tax collectors in October seeking to reform the IRS’s view of taxes on crypto staking.
IRS Tax Case Background
The years-long legal battle stemmed from an initial lawsuit against the IRS over a tax dispute. The couple opposed the agency’s stance on staking taxes, insisting that rewards for staked cryptocurrencies should be taxable after sale, just as a farmer’s proceeds are only recognized after the harvest.
Notably, the IRS refunded the couple’s $4,000 overdraft tax on their 8,876 Tezos (XTZ) earnings in 2019. However, they are taking a broader approach and attempting to create a legal framework that treats staked cryptocurrencies as new assets.
Although the court closed the case with the assumption that Joshua and Jessica had received a refund, the couple filed a new lawsuit in the case two months ago. They requested a refund of the $12,179 in taxes paid on the 13,000 XTZ earnings.
Meanwhile, the IRS has claimed that crypto stakers should pay a liability tax when their assets are frozen. The tax collectors cited Revenue Ruling Bill 202314, which supports tax collection…
