The IRS would refund $3,293 income tax, including interest, to a couple who had submitted the amount from 8,876 Tezos tokens obtained via staking, saying that it is not taxable.
In a civil lawsuit filed in May 2021 by the Nashville couple, the agency declared that digital assets gained through proof-of-stake are not considered as direct income.
The ruling adds that such assets are only as a ‘new property’ created by the taxpayer and should be first converted into a readily available source of wealth before taxation.
The couple, Joshua and Jessica Jarret, have vowed to pursue the matter further to obtain long-term guidance, even as the tax filing season for 2021 begins.
The ruling sets a huge precedent amid an ongoing debate on crypto taxation, even as the agency prepares to net more crypto investors.
The decision has stirred controversy by going against IRS policy which stated in December that transactions involving mining and staking activities should be brought under the tax bracket.
Source: Forbes