Tax Court Holds Staking Rewards Includable in Gross Income on Receipt

In the first opinion addressing the issue, the U.S. Tax Court held that cryptocurrency staking rewards must be included in gross income upon receipt. In Paschall v. Commissioner, T.C. Memo. 2026-46, the court considered a situation where the taxpayer held tokens in a custodial account and received staking rewards every month (as additional tokens). Although transfer restrictions applied, the court reasoned that the rewards were automatically credited into the taxpayer's account and could be converted into cash immediately upon receipt. The court rejected the argument that the rewards should only be taxable on sale or disposition. The decision, however, was a memorandum opinion and so does not create binding precedent. It is widely expected that the issue will be decided in a higher court and that Congress may act to overrule the case legislatively. For more information on the tax treatment of digital assets, visit Tax Facts Online. Read More: Link to Q7724.