The U.S. tax office will profit from staking rewards
Date: 2023-08-02 Author: Karina Ziganova Categories: CRYPTO PAYMENTS, IN WORLD
The U.S. Internal Revenue Service (IRS) has stated that U.S. crypto investors must report cryptocurrency staking rewards as gross income in the year they receive them. This is stated in the message of the department.
On July 31, the Internal Revenue Service issued Revenue Ordinance 2023-14 clarifying how income earned from staking digital assets should be treated for tax purposes. The ruling notes that under section 61 of the Internal Revenue Code, gross income includes all income from any source, unless there is a specific exception.
The provision of the document applies to cash-based taxpayers who receive any cryptocurrency as a reward for verifying transactions on Proof of Stake blockchains, and applies both when placing cryptocurrency directly and when placing through a centralized crypto exchange.
According to the tax authorities, the fair market value of cryptocurrency rewards should be included in annual income and determined upon receipt of assets.
Wealthy traders under attack
Last month, the IRS and U.S. prosecutors launched an investigation into wealthy crypto traders who are suspected of illegally using tax breaks offered by Puerto Rico.
The departments said about 5,000 Americans and 3,600 businesses have taken advantage of the region's tax breaks. Now the US authorities want to check everyone who has ever lived on the island and could hide the sources of their income. At least two US citizens may soon be charged.
Tax on NFTs
Another innovation of the IRS was the taxation of non-fungible tokens (NFTs). According to the regulator, they fall under the definition of collectibles along with works of art, antiques, coins, stamps and other categories.
If the NFTs are still designated as collectibles, they will be subject to a maximum capital gains tax of 28% when sold. However, only if the owner kept the tokens for a year or longer.
