Quote from: Yogee on April 10, 2024, 10:56:13 PM

I will have to read more on this but I what I understand now is that staking is basically interest you earn from keeping your dollars in a bank so it is also income that should be subject to tax. The only question now is when it should be taxed? At the time you earned it in ETH or when it was converted to USD?

edit - Okay so it should reported as part of your taxable income at the time you earned the reward and not at the time you sold it. The IRS also clarifies that the valuation of the staking rewards is at the time of earning it.

This is different to the tax treatment of trading cryptocurrencies which is classified as capital assets and subject to capital gains tax.

Yes, which injects additional complications into the mix. Suppose you paid your tax (in cash) on the ETH reward you happened to receive. However, you don't sell the ETH reward for the time being.

If ETH rises and you sell, do you still pay tax on the gains?

If ETH falls and you sell, do you get to deduct the loss?

Another way to put it, are ETH staking rewards like positions in a regular IRA or a Roth IRA?

I'm not aware of IRS guidance on this, but it seem pretty basic and essential for next year's taxes.