Originally published on: October 11, 2024
Josh and Jessica Jarrett, Tezos network stakers, have once again taken legal action against the IRS over its tax treatment of their cryptocurrency tokens. In a new complaint filed on October 10 in a Tennessee federal court, the Jarretts argue that tokens earned through staking should be considered property and only taxable when sold, not before.
They compare staking tokens to creating new property, similar to a farmer’s crop or a manufacturer’s product, where income is only generated upon sale. The Jarretts claim that new property should not be considered taxable income, challenging the IRS’s stance that block rewards are taxable the moment they are received.
Seeking a judgment to correct previous tax assessments, the Jarretts are requesting a refund of $12,179 paid in taxes on 13,000 Tezos tokens earned in 2020. With the support of Coin Center, a Washington, DC, think tank, they are determined to challenge the IRS’s treatment of staking rewards as income.
Their legal battle with the IRS started in 2021 and continues to unfold, with the Jarretts striving to set a precedent for proof-of-stake chains. Despite setbacks and dismissals, they persist in fighting for fair taxation policies in the cryptocurrency space.
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