Tezos founder Josh Jarrett and his wife are going head-to-head with the IRS once more, this time over how the agency treats staked XTZ tokens.
The Argument: Staked Tokens Shouldn’t Be Taxed Until Sold
The Jarretts argue that new tokens earned through staking should only be considered taxable income when they are sold. They believe that creating new property, whether it’s a farmer’s crop, an author’s manuscript, or a manufacturer’s product, isn’t taxable until it’s sold.
Not the First Time: A Familiar Fight
This isn’t the first time the Jarretts have taken on the IRS over this issue. In 2021, they filed a similar lawsuit seeking refunds for taxes paid on staked XTZ tokens. While the case was dismissed after a settlement offer, they’re now back in court seeking refunds and a permanent change to the IRS’s treatment of newly minted crypto assets.
Coin Center Joins the Fight
The Jarretts are getting support from the crypto advocacy group Coin Center. Coin Center believes that the case has big implications for the future of cryptocurrency and decentralized technologies, especially for proof-of-stake systems.
What’s at Stake?
The outcome of this case could have a significant impact on how crypto investors are taxed, particularly those who stake their tokens. If the Jarretts win, it could change the way the IRS views staked crypto assets, potentially leading to more favorable tax treatment for investors.
