Rewards earned from locking coins in Proof-of-Stake networks must be included in the calculation of taxable income. This follows from the the proposed amendments to the rules IRS.
“The fair market value of the rewards received for validation is included in the taxpayer’s gross income in the year in which the taxpayer gains control over such payments,” the document states.
The IRS initiative followed complaints from the SEC to local crypto exchanges regarding the legality of staking programs staking.
In February 2023, Kraken settled charges brought by the SEC against such a service that the platform had not registered. The company paid a $30 million penalty.
In July, a U.S. court ordered Kraken to hand over customer information to the Internal Revenue Service. The platform will have to disclose names, dates of birth, physical addresses, phone numbers, and Tax ID of users who conducted transactions totaling more than $20,000 in a calendar year.
A month earlier, the SEC filed a lawsuit against Coinbase. The regulator also targeted the Coinbase Earn staking program.
Earlier in March 2023, U.S. President Joe Biden proposed taxing crypto investors by $24 billion.
Earlier, the Organisation for Economic Co-operation and Development published a system for reporting crypto assets and amendments to the single standard for the exchange of tax information.