The IRS may not tax crypto earned through staking! The Jarret case involving Tezos may set the precedent.

In May of last year Josh and Jessica Jarrett requested a refund of income tax they paid on Tezos staking rewards in 2019. (Around $3200 for approximately 8800 Tezos tokens)

Today, the IRS has decided to issue that refund.

They will not refund any amount that was sold, obviously, but the couple is getting refunded for the entire amount requested, the tax they paid on the rewards that they did not sale.

This could be huge for everyone involved in cryptocurrency.

The records will be made public Thursday and the IRS has not made any public statements.

Source: Blockworks .com , forbes .com

The Jarrett couple argued that new coins are tax-payer created property and should not be taxed until sold or exchanged.

Edit: For those that are unfamiliar, the IRS views cryptocurrency as property, a capital asset. There are two methods of taxation, capital gains tax and income tax.

When you sell, trade, or dispose of a capital asset you incur capital gains tax.

When you receive crypto through staking rewards, mining, airdrops, the IRS views that as income and it’s subject to income tax, just like interest you earn on fiat in a traditional bank.

You owe income tax on it whether you sell or not.

This is what is in question, taxing something that has not been sold or traded, only created.