The Internal Revenue Service (IRS) has said that cryptocurrency staking rewards$BTC should be taxed upon receipt of the tokens, Bloomberg reported, citing a court filing.

Note that the IRS's decision was in response to a lawsuit filed by crypto investor Joshua Jarrett, who argued that the regulator should treat staking rewards as property rather than income. In October 2024, the man and his wife filed a lawsuit, also seeking $12,179 in back taxes paid on 13,000 Tezos tokens earned in 2020.

The court countered that staking creates new property and said that Jarrett must pay taxes on the value of the tokens upon receipt.

Note that the Jarretts' legal battle with the IRS began in 2021. They filed a lawsuit over 8,876 XTZ they received as staking rewards in 2019. The document stated that the assets should be considered property and taxed only when sold.

The IRS then offered a $4,000 tax refund, which the plaintiffs refused. The court dismissed the case, citing that the refund made the issue moot.