In a complaint filed by a crypto investor couple in an American court, they argued that the digital tokens gained through staking and mining are non-taxable by the US IRS until sold in the open market. The lawsuit was filed in a local court; the couple asked the tax collection agency for a refund.
Jessica and Joshua Jarrett, a Tennessee-based couple, argued that because their earnings constitute asset creation, their money that came from staking is un-taxable, comparing it with a writer writing a piece of literature and a baker baking his products.
The local media publication reported that the judge heard Joshua, who stated that he used his savings to mint 8,876 XTZ tokens two years ago and is yet to sell those virtual assets. Interestingly, the case is based on the fact that the coins were minted and are yet to be sold, meaning that no profit or earnings were made. The couple said,
Taxing newly created cakes, books or tokens as income would have far-reaching and detrimental effects on taxpayers and the U.S. economy, and is without support in the Internal Revenue Code, regulations, case law or the Constitution.
Not only that, but the couple also cited a case from the 1920s to back their case. The century cold case that the earning must involve a coming in and an asset made by a taxpayer is not coming in. Instead, it goes out. Reportedly, the duo mentioned digital assets as other earnings, resulting in more than $9K paid to the IRS.
Meanwhile, the couple requested a $3,293 refund and five hundred dollars in credit because of a decrease in earnings. This comes after March this year when the American IRS clarified in a statement that the virtual assets bought using crypto assets using traditional currency and didn’t sell those are not asked to report their activities.