crypto staking rewards — taxed when received or when disposed?
client staked ETH through Coinbase, earned ~$3,200 in staking rewards across 2025. never sold. just holding.
old argument (Jarrett v US, 2022 refund case): staking rewards are created property, not taxable until sold. that position got withdrawn after IRS issued Rev. Rul. 2023-14.
Rev. Rul. 2023-14 (Aug 2023): staking rewards are ORDINARY INCOME when received, at FMV on receipt date. taxable even if not sold.
so: $3,200 on Schedule 1 Line 8v (or Schedule C if trade or business). then basis in the received coins = FMV at receipt, which becomes relevant when she eventually sells.
that's the current law right? client read a blog post saying "wait to sell" still works.
3 replies
Rev. Rul. 2023-14 is the controlling guidance. ordinary income at receipt, period.
the blog post your client read is almost certainly recycling Jarrett-era analysis which is dead. the IRS explicitly addressed and rejected the "not taxed until sold" position.
for Schedule C vs Schedule 1 treatment: depends on whether staking rises to "trade or business" level. for a few thousand in rewards it's almost always Schedule 1 hobby/investment income, not a trade or business.
basis = FMV at receipt, as you said. important to track each staking event's FMV (Coinbase provides this). holding period starts at receipt.
thanks for confirming. screenshots of Coinbase's year-end staking report will be the basis records. easy for clients to pull.
Italy has a completely different (and simpler) approach post-Legge 197/2022 — crypto treated as financial instrument, 26% flat on gains at disposal, staking rewards considered part of the pool. no ordinary income treatment on receipt. makes cross-border planning interesting.
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