Should PoS stake rewards be taxed immediately? US couple's lawsuit against the IRS sparks discussion

The Internal Revenue Service (IRS) recently reiterated its position on the taxation of stake rewards in a tax lawsuit, stating that stake rewards should be taxed when received, rejecting the argument that stake rewards should only be taxed upon sale, which may affect the future taxation of cryptocurrency rewards. (Background: Founder of Hex evades tax of hundreds of millions of euros and is 'wanted' by Interpol. His response: It feels great, you can't do anything to me.)(Additional background: Overview of encryption tax policies in Asia, which countries are more friendly?) Today (24th), in response to a recent lawsuit, the IRS reaffirmed its tax position on cryptocurrency stake rewards, clearly stating that stake rewards constitute taxable income once received, rather than only taxed upon sale or exchange. This statement may reshape the taxation of cryptocurrency stake assets in the future. Jarrett Couple's Tax Lawsuit According to Bloomberg, the protagonists of this lawsuit are Joshua and Jessica Jarrett, a couple from Tennessee, who first sued the IRS in 2021, claiming that the 8,876 tokens obtained through staking on the Tezos network in 2019 should not be taxed at the time of acquisition, but should be treated as 'new property' similar to crops or manuscripts, and taxed only upon sale. At that time, the IRS proposed a refund of $4,000 in taxes to settle the lawsuit, but the couple refused and sought to establish a broader legal precedent. They stated: 'The government does not want to defend the position that the tokens I created through staking are taxable income. I need a better answer. So I refused the government's offer to refund me.' In October 2024, the Jarretts filed a second lawsuit, seeking a refund of $12,179 in taxes on stake rewards obtained in 2020, and requested the court to issue a permanent injunction against the IRS's stake reward tax policy. They insist that taxable income should only be generated when such 'new property' is sold. IRS: Stake rewards should be taxed immediately In response to the Jarretts' demands, the IRS stated that according to the guidance issued in 2023, both block rewards obtained through staking or mining are considered taxable income at the time of generation, with their market value as the basis for taxation. In court documents filed on December 20th, the IRS cited Revenue Ruling 2023-14, emphasizing that stake rewards should be taxed upon receipt, refuting the Jarretts' claim that stake rewards are 'new property' and should only be taxed upon sale. Potential Impact This case has been widely followed and discussed, especially for blockchains using the Proof of Stake (PoS) mechanism, and may have a significant impact. The outcome of the case, whether stake rewards can be considered similar to other forms of property and only taxed when realized, or should be taxed as immediate income, will be a crucial turning point in the US cryptocurrency tax policy, which deserves our continued attention. Related Reports Founder of Hex evades tax of hundreds of millions of euros and is 'wanted' by Interpol. His response: It feels great, you can't do anything to me. Overview of encryption tax policies in Asia, which countries are more friendly? Ohio lawmakers propose BTC reserve bill: The speed of US dollar depreciation is accelerating, and BTC is needed to protect tax revenue. (Should PoS stake rewards be taxed immediately? Disgruntled US couple sues the IRS, becoming the focus of discussion) This article was first published on BlockTempo, the most influential blockchain news media in Motion Zone.