The IRS is yet to publish any official guidance on how cryptocurrency staking is to be treated for tax purposes in the United States. This has meant there is great uncertainty in the cryptocurrency community as to how to record this on their tax forms. Fortunately, many tax professionals have now analyzed the situation and come to some sort of consensus on the issue.
Thankfully, the IRS has given guidance on the tax treatment of cryptocurrency received from hard forks, and the situation appears to be similar for staking.
This guidance states that the cryptocurrency received should be recorded as income at fair market value (generally accepted to mean the price on a major cryptocurrency exchange in USD) at the time it is received.
Following this, when the asset is disposed of, the value recorded as income when you initially received the cryptocurrency should be used as the cost basis for the disposal calculation. Check out our article on cryptocurrency fork taxation in the US, or the IRS's Crypto FAQs for more information.
As always, and specifically in this case, we recommend consulting a certified tax professional if you have income from cryptocurrency staking as this is still an unclear area in taxation terms. It is important that when you do come to a decision about how staking income is treated, that you declare this on your tax return and keep a record of how and why you recorded it.
If you need to calculate your crypto taxes, but want to retain control over your personal and private financial data, then look no further! Recap allows you to connect to exchanges via read-only APIs and calculate your tax position in minutes, all with end-to-end encryption, meaning that your data remains yours. Click the button below to give it a go!
Need to sort out your crypto taxes? Use Recap, the privacy focused cryptocurrency accounting software to calculate the taxable gain or loss on your cryptocurrency investments!
Disclaimer: This article is intended as an informative piece. This is not accounting or tax advice. Please speak to a qualified tax professional about your specific circumstances before acting upon any of the information in this article.