In July 2023, the IRS issued Rev. Rul. 2023-14, ruling that staking rewards are gross income in the year received, valued at fair market value at the date of receipt. The ruling resolves the question the Jarrett case raised without fully addressing it. This post explains what the ruling covers, what it explicitly does not address, the implications for proof-of-stake validators and liquid staking participants, and how to document your position.
In this post
- 1. What Rev. Rul. 2023-14 says and the reasoning behind it
- 2. What the Jarrett case argued and why the IRS declined to follow it
- 3. Liquid staking tokens (stETH, rETH): does the ruling apply to synthetic receipt?
- 4. Valuation at receipt: which price, which timestamp, which source
- 5. Documenting your staking income position: the records the IRS will ask for
1. What Rev. Rul. 2023-14 says and the reasoning behind it
In July 2023, the IRS issued Rev. Rul. 2023-14, ruling that staking rewards are gross income in the year received, valued at fair market value at the date of receipt. The ruling resolves the question the Jarrett case raised without fully addressing it. This post explains what the ruling covers, what it explicitly does not address, the implications for proof-of-stake validators and liquid staking participants, and how to document your position.
This section walks through the practical details for crypto holders, traders, and operators. In an engagement, this is the work product Chainblock Financial produces: documented methodology, citation to authority where it exists, and explicit identification of open questions where it doesn’t.
Key considerations
- The specific rule, regulation, or guidance that applies — with citation.
- Where the guidance is silent and a defensible position has to be taken.
- What documentation you need to preserve to support the position at audit.
- How to record the decision in your subledger so future preparers can follow it.
For most clients, this category of decision appears multiple times in a single year. Getting the methodology right once — and applying it consistently — is what distinguishes a defensible return from a guess. This is the work we do every quarter on a Subledger engagement; it is the work we re-do under engagement when a prior preparer left it undocumented.
2. What the Jarrett case argued and why the IRS declined to follow it
In July 2023, the IRS issued Rev. Rul. 2023-14, ruling that staking rewards are gross income in the year received, valued at fair market value at the date of receipt. The ruling resolves the question the Jarrett case raised without fully addressing it. This post explains what the ruling covers, what it explicitly does not address, the implications for proof-of-stake validators and liquid staking participants, and how to document your position.
This section walks through the practical details for crypto holders, traders, and operators. In an engagement, this is the work product Chainblock Financial produces: documented methodology, citation to authority where it exists, and explicit identification of open questions where it doesn’t.
Key considerations
- The specific rule, regulation, or guidance that applies — with citation.
- Where the guidance is silent and a defensible position has to be taken.
- What documentation you need to preserve to support the position at audit.
- How to record the decision in your subledger so future preparers can follow it.
For most clients, this category of decision appears multiple times in a single year. Getting the methodology right once — and applying it consistently — is what distinguishes a defensible return from a guess. This is the work we do every quarter on a Subledger engagement; it is the work we re-do under engagement when a prior preparer left it undocumented.
3. Liquid staking tokens (stETH, rETH): does the ruling apply to synthetic receipt?
In July 2023, the IRS issued Rev. Rul. 2023-14, ruling that staking rewards are gross income in the year received, valued at fair market value at the date of receipt. The ruling resolves the question the Jarrett case raised without fully addressing it. This post explains what the ruling covers, what it explicitly does not address, the implications for proof-of-stake validators and liquid staking participants, and how to document your position.
This section walks through the practical details for crypto holders, traders, and operators. In an engagement, this is the work product Chainblock Financial produces: documented methodology, citation to authority where it exists, and explicit identification of open questions where it doesn’t.
Key considerations
- The specific rule, regulation, or guidance that applies — with citation.
- Where the guidance is silent and a defensible position has to be taken.
- What documentation you need to preserve to support the position at audit.
- How to record the decision in your subledger so future preparers can follow it.
For most clients, this category of decision appears multiple times in a single year. Getting the methodology right once — and applying it consistently — is what distinguishes a defensible return from a guess. This is the work we do every quarter on a Subledger engagement; it is the work we re-do under engagement when a prior preparer left it undocumented.
4. Valuation at receipt: which price, which timestamp, which source
In July 2023, the IRS issued Rev. Rul. 2023-14, ruling that staking rewards are gross income in the year received, valued at fair market value at the date of receipt. The ruling resolves the question the Jarrett case raised without fully addressing it. This post explains what the ruling covers, what it explicitly does not address, the implications for proof-of-stake validators and liquid staking participants, and how to document your position.
This section walks through the practical details for crypto holders, traders, and operators. In an engagement, this is the work product Chainblock Financial produces: documented methodology, citation to authority where it exists, and explicit identification of open questions where it doesn’t.
Key considerations
- The specific rule, regulation, or guidance that applies — with citation.
- Where the guidance is silent and a defensible position has to be taken.
- What documentation you need to preserve to support the position at audit.
- How to record the decision in your subledger so future preparers can follow it.
For most clients, this category of decision appears multiple times in a single year. Getting the methodology right once — and applying it consistently — is what distinguishes a defensible return from a guess. This is the work we do every quarter on a Subledger engagement; it is the work we re-do under engagement when a prior preparer left it undocumented.
5. Documenting your staking income position: the records the IRS will ask for
In July 2023, the IRS issued Rev. Rul. 2023-14, ruling that staking rewards are gross income in the year received, valued at fair market value at the date of receipt. The ruling resolves the question the Jarrett case raised without fully addressing it. This post explains what the ruling covers, what it explicitly does not address, the implications for proof-of-stake validators and liquid staking participants, and how to document your position.
This section walks through the practical details for crypto holders, traders, and operators. In an engagement, this is the work product Chainblock Financial produces: documented methodology, citation to authority where it exists, and explicit identification of open questions where it doesn’t.
Key considerations
- The specific rule, regulation, or guidance that applies — with citation.
- Where the guidance is silent and a defensible position has to be taken.
- What documentation you need to preserve to support the position at audit.
- How to record the decision in your subledger so future preparers can follow it.
For most clients, this category of decision appears multiple times in a single year. Getting the methodology right once — and applying it consistently — is what distinguishes a defensible return from a guess. This is the work we do every quarter on a Subledger engagement; it is the work we re-do under engagement when a prior preparer left it undocumented.
This is the work we do.
Every Chainblock engagement applies this methodology to your actual transactions, your actual entity structure, and your actual exposure. If you’d rather have it done than read about how it’s done, schedule a 30-minute intake call.
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