🏦Crypto Rewards -Understanding IRS Guidance on Taxation of Staked Cryptocurrency Rewards

The Passive Mindset
3 min readAug 8, 2023

The Internal Revenue Service (IRS) recently issued Rev. Rul. 2023–14, addressing the tax treatment of rewards earned from staking cryptocurrency on proof-of-stake blockchains. This ruling provides important insights for taxpayers who engage in such activities.

IRS document link shared later in this blog.

Let’s break down the key points:

Issue:
The central question posed in the ruling is whether taxpayers who stake cryptocurrency on a proof-of-stake blockchain and receive additional cryptocurrency as rewards must include the value of these rewards in their gross income, and if so, in which taxable year.

Background:
- The Internal Revenue Code defines digital assets, such as cryptocurrency, as any digital representation of value recorded on a secure distributed ledger.

- Cryptocurrency, including convertible virtual currency, is treated as property for tax purposes, and general tax principles applicable to property transactions apply.

- Cryptocurrency transactions are secured through cryptography on a distributed ledger known as a blockchain.

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The Passive Mindset
The Passive Mindset

Written by The Passive Mindset

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