US IRS may agree not to consider unsold crypto as income

The family of crypto investors returned the money spent on taxes in 2019 through the court

03.02.2022 - 10:10

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1 min

What’s new? Joshua and Jessica Jarrett filed a lawsuit in US District Court seeking a refund of $3293 in income tax paid in 2019 for receiving 8876 Tezos tokens. After the first hearing, the Internal Revenue Service (IRS) approved a full refund of 2019 taxes. The staking reward will now be classified as property, not income.

The Jarretts’ lawsuit

How did the couple win the lawsuit? The Jarretts argued that tokens obtained using Proof-of-Stake protocols are property created by the taxpayer and should not be taxed until they are sold or exchanged. There is no provision in US law or IRS regulations that allows such assets to be taxed.

What happened next? Despite their success, the Jarretts’ lawyer rejected the IRS’s offer of a refund. The married couple wants more long-term protection from such taxes, not just for 2019.

This case may create a real precedent for the future taxation of PoS miners and stakers. The Jarretts have many like-minded people who also believe that such assets should not be subject to income tax until they are sold.

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