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 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.
-
-
Mortgage Demand Ticks Up for First Time in 3 Weeks
Weekly mortgage applications improve despite the 30-year fixed rate edging back up to its highest level in 4 weeks, economist says.
-
How To Get the Best Savings Account Bonuses
By opening the right savings account today, you could be maximizing your earnings through both compound interest and cash bonuses.
-
Millionaire Tax Evaders Beware: The IRS Is Coming
Tax Evasion The IRS is targeting 1,600 millionaire tax evaders and 575 partnerships. Are you on the agency’s priority list?
-
Investments In U.S.-Made Drone Technology Are Gaining Strength — The Kiplinger Letter
The Kiplinger Letter The U.S.-Made drone aircraft, software sector has been boosted by a crackdown on Chinese drones amid security concerns.
-
Will the U.S. Dodge a Recession?: Kiplinger Economic Forecasts
Kiplinger Economic Forecasts The labor market is healthy enough to dodge a recession, even though job growth is lethargic.
-
More People Are Paying This Tax On Investment Income Each Year: Kiplinger Tax Letter
Tax Letter The number of returns reporting the net investment income tax has more than doubled and revenue from the tax has grown by $38 billion over the past decade.
-
Tax Preparers E-Filing Rules Review: Kiplinger Tax Letter
Tax Letter Tax preparers who expect to file more than 10 returns in a year are expected to file them electronically. But there are some exceptions.
-
IRS Announces Florida Tax Relief Following Hurricane Idalia
Tax Deadline In response to the severe damage caused by Hurricane Idalia, the IRS has extended tax deadlines for affected Floridians.
-
Falling Prices in China Could Be a Boon For the U.S.: Kiplinger Economic Forecasts
Economic Forecasts Falling prices in China could be a boon for the U.S. as the country's weakened economy shows no clear signs of improvement.
-
Domestic Airfare Is Still Cheaper Than Pre-Pandemic Prices: Kiplinger Economic Forecasts
Economic Forecasts Although domestic airfare is cheaper, some international flights are still more expensive than usual.
