TechFlow news, on December 24, according to Cointelegraph, the IRS rejected the arguments raised by Joshua Jarrett and his wife Jessica Jarrett in their second lawsuit. The agency stated that rewards constitute taxable income upon receipt. The IRS said: "Revenue Ruling 2023-14 requires taxpayers to report income at fair market value when they gain the ability to sell, exchange, or otherwise dispose of staking rewards."
The dispute between the Jarretts and the tax authority has been ongoing since 2021, when the couple filed their first lawsuit over 8,876 XTZ tokens acquired through staking in 2019. They argued that these tokens were analogous to a farmer's crops and should be treated as property, taxed only upon sale. The court later dismissed the case as moot due to the refund already issued.
The Jarretts filed a second lawsuit in October 2024, seeking a declaration that their staking rewards should be treated as property and taxed only upon sale.
In this new lawsuit, they are requesting a refund of $12,179 in taxes paid for 13,000 XTZ tokens received during the 2020 tax year, and are also seeking a permanent injunction against the IRS's current tax treatment of their tokens.
