In May, a Nashville couple argued that tokens obtained through Proof of Stake (PoS) are taxpayer-created properties that should not be taxed until they are sold or bartered. The cashback option can help clarify the PoS tax in the future.
On May 26, 2021, according to a civil lawsuit filed with the U.S. District Court for the Midwest District of Tennessee, Joshua and Jessica Jerrett sought a refund of $3,293 income tax paid in 2019 for the purchase of 8,876 Tezos. In addition, the couple requested a $500 increase in tax credits to make up for the lost income.
According to sources familiar with the matter, Joshua and Jessica Jarrett received a letter from the Department of Justice on December 20, stating that the US Internal Revenue Service (IRS) has approved a full refund of 2019 taxes against staking tokens. The decision is an important step forward for staking rewards to be classified as property rather than taxable income.
They Will Continue The Case For Precedent Decision
The Jerrett family claimed that tokens obtained through Proof of Stake protocols are taxpayer-generated properties that should not be taxed until sold or bartered. According to the complaint, there are no provisions in US law or IRS rules and regulations that allow taxpayer-created property to be taxed as income. Despite this initial success, Jarretts’ attorney rejected the IRS’s tax refund offer on January 25, claiming it gave no assurance that these incomes would not be retaxed. In other words, the Jarretts won the first round of their lawsuit, which was filed in Tennessee Mid-District Court in May 2021, though that victory would only apply to 2019 taxes. They plan to pursue the case in court to obtain long-term protection. This can set a precedent for anyone who wants to profit by staking cryptocurrencies.
Sources closer to the matter reported that the couple said they planned to pursue the case further to gain longer-term protection and set a nationwide precedent.
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