How to tax income from Ethereum staking?
During a recent episode of the Untold Stories podcast, Roger Brown, Former IRS Special Counsel, elaborated on the need for a simpler taxation strategy regarding income from Ethereum PoS staking.
Ethereum in its post Proof-of-Work era may be a problem for tax authorities, said Former IRS Special Counsel Roger Brown.
Ethereum is switching to Proof-of-Stake — a new algorithm of coin emission, where the confirmation of transactions in the network will be done by validators, not miners. They will make money from a process called staking. Since cryptocurrency taxation already exists in the U.S., the question arises — will income from staking become a subject for paying taxes?
This question was answered during a recent episode of Untold Stories by Roger Brown, Former IRS Special Counsel. He drew particular attention to Form 1099, which requires owners of cryptocurrencies to report their digital assets to the IRS.
“People and many exchanges just didn’t do 1099 reporting because there’s actually a technical reason in the way the IRS has written the 1099 rules and that there was a legal basis for the exchanges not to do 1099 reporting.”
Brown also mentioned that there are difficulties in compiling tax history for users of exchanges, as trading platforms do not always know a user’s entire transaction history.
“They’re going to come out with regulations this year to address tax reporting on this form 1099 and in crypto, but they are not going to deal with the fact that, the core problem of inputs into tax calculation will be wrong because no single exchange knows to complete history of many of the people that trade on their exchange.”
This may pose to be a huge challenge and risk for the crypto-industry, given the fact that its growth is steadily increasing over time. And you can earn money out of this trend with our fair crypto lotto Ethex.bet!