The Tezos Tea Party
Market Meditations | February 4, 2022
Crypto can bring many surprises to both the new and old investor, one of those being in the form of taxes owed. Even tax professionals make mistakes and find it difficult to navigate crypto tax laws. A new investor could be in for a doozy the first time they file taxes on digital assets; new legislation is always around the corner and interpretation can differ greatly.
A Nashville couple has experienced this first hand after the IRS required they pay taxes on crypto earned from staking on the Tezos blockchain.
- The couple had not sold any of the crypto in question but were required to pay taxes on their earnings as though it was income, (like dividends on securities) so they sued the IRS.
- The IRS offered the couple a refund on the unliquidated crypto earnings which were previously taxed. The couple refused the refund, in an effort to set a legal precedent.
- Josh Jarrett, the tax-payer in question called the refund offer “great news at first glance, but until the case receives an official ruling from the court, there will be nothing to keep the IRS from challenging me again on this issue. I need a better answer.”
- Congressmen from the US House of Representatives wrote a letter to the IRS in 2020 asking for clarification on staking rewards.
The answers they seek could still be a long time off as the hearing is set for March of 2023.
Meanwhile, another bill has been re-introduced in Congress to allow for non-reporting on personal transactions where the capital gains are less than $200.