IRS Now Requires U.S. Crypto Investors to Include Staking Rewards in Gross Income

The Internal Revenue Service (IRS) has recently issued a ruling impacting United States cryptocurrency investors engaged in staking services.

According to Revenue Ruling 2023-14, individuals must include the value of rewards received from staking activities in their gross income.

Revenue Ruling 2023-14, released on July 31, 2023, provides clarity on the tax implications of staking activities, considering income from various sources as part of the gross income.

This ruling applies to income received in the form of money, property, services, or staking rewards.

The tax treatment also applies to investors staking tokens through a cryptocurrency exchange, as the bulletin specifies that rewards are received as a result of the validation.

The IRS guidelines dictate that the taxable income should be calculated based on the fair market value of the cryptocurrency rewards at the time of receipt, which is then added to the taxpayer's annual income for the corresponding tax year.

The recent IRS ruling has significant implications for the taxation of investors involved in staking activities.

While PoS is appreciated for its energy efficiency and environmental benefits compared to proof-of-work, the tax implications were not explicitly defined until now.