Tezos Pledge Tax

The IRS provided a refund to an American couple who paid taxes on Tezos that were never sold, but created and acquired through pledges.

This development between the U.S. tax collection agency and the taxpaying couple is a true innovation in the industry.

Taxes paid on Tezos pledge

This story originated in Nashville, Tennessee in 2019. The couple paid taxes on Tezos tokens, which were proceeds earned by pledging and creating new tokens that were never sold. As a result, they are seeking a refund on the grounds that the tokens were their property at the time of creation, but never generated any actual income in 2019 and cannot be considered property like cryptocurrencies purchased on the market because they were created as tokens.

In the filing of the lawsuit, it states that taxing Tezos earned through pledges is a bit like charging a writer to write a book or a baker to make a cake.

Mr. and Mrs. Jarrett (that's the couple's last name) claim that they acquired 8,876 Tezos tokens, worth about $9,400, by pledging them as "creative" property, but because they are property under U.S. law they must be taxed.

In December 2021, the IRS demanded repayment of more than $3,000 to the couple, but the couple, backed by the Proof of Equity Alliance (POSA), appears to have refused.

If the parties fail to reach an agreement, litigation will commence in March 2023.

Rather than settle for a refund, the couple and the POSA want to develop a ruling that will clarify once and for all how cryptocurrency generated through pledges will be taxed.

A clear law would certainly help all those associated with cryptocurrencies to also fulfill their duties to the state by paying taxes.

U.S. Cryptocurrency Tax Cryptocurrencies taxed as property in the U.S. Cryptocurrency taxation in the U.S.

Since 2014, the United States has made it clear that cryptocurrencies are property and that activities that use them have tax consequences.

However, the cryptocurrency world is constantly evolving, and regulations from 2014 may become old hat when applied to new concepts like pledges. It remains to be seen how the litigation will end and whether a new page will be written for the history of the relationship between cryptocurrencies and taxes.

The post Cryptocurrency Tax, IRS Case and Pledging Tezos appeared first on The Cryptonomist.