How is Crypto Staking Taxed Post Jarrett?
By Anthony Diosdi In 2021, a Tennessee couple filed suit in federal district court in Tennessee seeking the refund of the federal income tax they paid on certain newly issued Tazos cryptocurrency units they acquired in 2019. See Jarrett v. United States, No. 3:21-cv-00419 (M.D. Tenn. 2021)(May 26, 2021). The cryptocurrency units at issue were the rewards the couple had received for their “staking” activities on Tezos blockchain network. Rather than contest the matter, the Internal Revenue Service (“IRS”) refunded the tax paid by the couple. As a result, the court dismissed the case, depriving the cryptocurrency market of needed clarification in this area. This article discusses the current state of the taxation of crypto staking and how investors can calculate their basis in the block rewards from staking. An…