Good News for Crypto Stakers As IRS Agrees Not to Tax Unsold Crypto Tokens
The Inland Revenue Service has agreed not to tax unsold staked or mined crypto towns or digital assets. Taxing unrealized gains from staked tokens has been a significant issue to crypto stakers and miners in the last couple of months. The news comes as a relief to many, especially after realizing that the IRS will refund a Nashville couple following a tax payment they made on unclaimed Tezos token staked in 2019.
Nashville Couple Will Get a Refund from the IRS
Last May, Nashville couple Joshua and Jessica Jerrett filed a legal complaint with the U.S. District Court in Tennessee for a $3.2k refund of income tax paid on the purchase of 8,876 Tezos to the revenue body in 2019. In the couple’s defense, they argued that the Tezos tokens were gained through Proof-of-Stake protocols, which labels them as taxpayer properties. Under the IRS laws, these tokens can’t be taxed until sold.
In continuation of their defense, the couple compared unsold staked cryptos to unsold books written by an author. The complaint accused the government of attempting something that’s not backed by the IRS constitution and detrimental to taxpayers and the economy.
Although the IRS has agreed to refund the couple, the District Court will officially sit today to announce publicly the issuance of a refund to the couple, bringing an end to a two-year issue. Not only will the IRS refund the paid tax. The couple is asking for an additional $500 in tax credits for lost income.
Reports state that the couple plans on furthering the case to get longer-term protection and set an example for future outcomes. Taxpayers are hoping that there will be no legislative drag or outcome that resembles the crypto staking laws implemented in the U.K., where staking crypto includes capital tax gains whether unclaimed or not.
Ruling Will Clarify Tax Payments on PoS Cryptocurrency
The court ruling will set an unprecedented mark in staked crypto taxation. Stakers will be fully aware of the tax regulations surrounding stake tokens, judging by the recent ruling. While the court victory is a big relief to crypto stakers, the losing party is the IRS.
The entity still faces a big hurdle on how to draft a proper guidance on crypto taxation, especially regarding unclaimed staking rewards. Presently, the IRS only confirms from taxpayers if they have sold or exchanged any digital asset.
Crypto taxation across the globe is coming into full force, with different countries implementing their laws. Recently, India slammed a 30% tax on digital assets. However, countries like Thailand and Portugal are backing down from taxing the nascent assets, with the former recently removing a 15% tax on capital gains.
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