According to a judgement published Monday by the Internal Revenue Service (IRS), a cryptocurrency investor who receives incentives for validation activities on a proof-of-stake network should record the payments as income in the year the investor obtains custody of the tokens.
According to the legal analysis, “the fair market value of the validation rewards received is included in the taxpayer’s gross income in the taxable year in which the taxpayer gains dominion and control over the validation rewards,” which states that value should be calculated as of the moment the U.S. taxpayer gains control of the tokens.
According to the agency, the law also applies to investors staking tokens through a crypto exchange if “the taxpayer receives additional units of cryptocurrency as rewards as a result of the staking.”
