No taxes on earned crypto assets until they are sold by earners: IRS
A case settled in favor of the plaintiff and presented a clear example that people should remain solid with the existing laws and rules to fight against unfair activities.
Crypto and blockchain-based crypto industry have lots of challenges and many things are still new for the government authorities. A new type of system keeps entering crypto and also rules of government authorities changes from time to time. Crypto tax rules have always remained one of the most controversial and confusing topics for this crypto Industry.
In May 2019, Jarretts (Nashville couple) filed a lawsuit against the US government and claimed that they paid tax for the crypto assets (Tezos coin) that they earned through staking.
According to available reports regarding this matter, the court decision came in favor of the Plaintiff and clearly said that there should be no tax on the unsold amount of crypto assets, as per existing rules.
So the 8,876 Tezos (XTZ) were not part of the income of Jarretts. The complaint also mentioned that the government is trying to impose tax against the rules on Digital assets-based income, which is not part of income.
“Taxing newly created cakes, books, or tokens as income would have far-reaching and detrimental effects on taxpayers and the U.S. economy, and is without support in the Internal Revenue Code, regulations, case law, or the Constitution.”
It is expected that a court filing announcement in favor of Plaintiff will come into the public domain today. And IRS announced that it will follow the order and will give $3,793 as a refund to the plaintiff, which was the amount paid by Jarretts for unsold crypto assets.
Through this case outcome, few crypto traders are happy that laws and rules are still in favor of the crypto traders but besides this, many crypto traders claimed that there are chances that new legislation may enter this industry by Government agencies because of such cases.
Read also: Crypto is not a legal asset, says Indian finance minister
