According to Deep Tide TechFlow, on December 24, Cointelegraph reported that the IRS rejected arguments in the second lawsuit filed by Joshua Jarrett and his wife Jessica Jarrett. The agency stated that rewards constitute taxable income upon receipt. The IRS remarked, 'Revenue Ruling 2023-14 requires taxpayers to report income at its fair market value when they gain the ability to sell, exchange, or otherwise dispose of staking rewards.'
Since 2021, the Jarrett couple has been in a dispute with the tax authorities, which began when the couple filed their first lawsuit regarding the 8,876 XTZ tokens obtained through staking in 2019. They argue that these tokens are akin to a farmer's crops and should be treated as property, taxed only upon sale. The court later ruled the case was no longer in dispute due to a tax refund and subsequently dismissed it.
The Jarrett couple filed a second lawsuit in October 2024, seeking to declare that their staking rewards should be considered property and taxed only upon sale.
In the new lawsuit, they are seeking a refund of the $12,179 in taxes paid on the 13,000 XTZ tokens earned for the 2020 tax year and are requesting a permanent injunction against the IRS's current tax treatment of their tokens.
