Getting the right tax advice and tips is vital in the complex tax world we live in. The Kiplinger Tax Letter helps you stay right on the money with the latest news and forecasts, with insight from our highly experienced team (Get a free issue of The Kiplinger Tax Letter or subscribe). You can only get the full array of advice by subscribing to the Tax Letter, but we will regularly feature snippets from it online, and here is one of those samples…
A man asking a court to rule on the taxation of staking rewards got bad news. A federal appeals court tosses his case. He filed a refund claim alleging that token rewards he got from staking cryptocurrency are created property that is not taxed on receipt but on disposition. The IRS first disallowed his refund claim. But after he filed a lawsuit, seeking a return of his money, the IRS sent him a refund check.
Last year, a trial court dismissed the case without ruling on the merits. The Sixth Circuit Court of Appeals has now affirmed the lower court’s decision. The man filed a refund suit, and the IRS later paid him in full. That makes the case moot. It doesn’t matter that the taxpayer didn’t cash the refund check (Jarrett, 6th Cir.).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Meanwhile, while the above court case was going on, the IRS issued guidance on the taxation of staking rewards in July. When one stakes crypto native to a proof-of-stake blockchain and receives additional crypto units or tokens as validation rewards, the fair market value of those token awards is gross income in the year the taxpayer has dominion and control over the tokens (Rev. Rul. 2023-14).
In other cryptocurrency tax news, brokers get guidance on how to comply with reporting rules on digital assets. A 2021 law requires brokers to report the sales price, tax basis and other information on digital asset trades. The rules were scheduled to first take effect for digital assets acquired on or after Jan. 1, 2023, but the IRS previously delayed the reporting obligation. Proposed regulations issued by the IRS address a multitude of topics:
- Reportable digital assets
- Brokers required to report under the rules (the definition of broker for this purpose is broad)
- Types of sales subject to reporting
- Information to be reported to the IRS and the taxpayer
- Gross proceeds in digital asset transactions
- And much more
Brokers will use the new IRS Form 1099-DA to report this information. Brokers have a couple of years to prepare for this. Under the proposed regulations, brokers must report gross proceeds from digital asset sales taking place in 2025 or later. That means you won’t receive a 1099-DA from your broker until early 2026. Reporting of tax basis and character of gain begins with 1099-DAs sent out in 2027.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.
-
Ten IRS Audit Red Flags for Retirees in 2025Retirement Taxes Retirees who think they can escape the IRS audit machine should think again.
-
AMT and Pass-Throughs Add Complex Layers to 2025 SALT Tax PlanningThe Tax Letter The state and local tax (SALT) deduction is a key sticking point in President Trump's tax plan.
-
Could ERC Delays Get Worse if Trump Downsizes the IRS?IRS The Trump administration’s push to shave down the IRS can impact taxpayers like you.
-
IRS Income Tax Refund Schedule 2025: When Will Your Refund Arrive?Tax Refunds Your 2025 IRS tax refund may arrive sooner than you think. Here’s a schedule for when you can expect your check or direct deposit.
-
IRS Tax Refunds Are $526 Bigger This Year: Here's WhyTax Refunds Inflation-related changes to the tax code could result in a larger refund.
-
Ten IRS Audit Red Flags for Self-Employed IndividualsIRS Audits Taxpayers who file Schedule C with their Form 1040 have a greater chance of an IRS audit.
-
Trump Wants You Out of the IRS, But You'll Have to Wait Until MayIRS Some IRS employees won’t be able to resign using the buyout offer until the end of tax season.
-
Popular Tax Breaks Are in DangerThe Tax Letter A number of tax breaks, including the home mortgage interest deduction, are in peril as lawmakers hunt for revenues to pay for the President's tax plan.
