PHILIPP BEHRENDT Quoted in Tax Notes Article Crypto Tax an Deregulation Outlook
Posted by Hochman Salkin Toscher Perez P.C. 
Posted on Tuesday, December 10, 2024
Philipp Behrendt was recently quoted in Lee A. Sheppard’s Tax Notes Federal’ article, “Crypto Tax and Deregulation Outlook” (TAX NOTES FEDERAL, VOLUME 185, DECEMBER 9, 2024). The article discusses he IRS’s interpretation of staking rewards and the complexities surrounding failing cryptocurrency platforms.
Commenting on Rev. Rul. 2023-14, Behrendt remarked, “This is certainly a harsh result for affected users, but it aligns with IRS interpretation of staking rewards as being reportable upon receipt. Thus, it only affirms IRS prior guidance.” He acknowledged, however, that this interpretation is being challenged in court, particularly in Jarrett v. United States (M.D. Tenn.) and could face legislative changes in the future.
Behrendt also identified a potential “grey zone” in the guidance, stating: “In cases involving failing platforms, such as those in bankruptcy or facing operational challenges, there could often be a window where account holders face de facto restrictions due to factors like technical issues, withdrawal delays, or system instability.” He explained that these practical realities may significantly impair taxpayers’ ability to transfer or withdraw staking rewards before an official freeze.
Addressing the difference between brokered and direct staking, Behrendt highlighted the unique tax implications of each:
- Direct Staking: Taxable upon validation, as the staker directly manages technical aspects like wallet management and node operation.
- Brokered Staking: Governed by platform terms and conditions, which can influence when rewards are available for withdrawal or under the staker’s control.
Philipp Behrendt’s expertise in navigating the intersection of tax law and cryptocurrency continues to provide valuable insights into emerging regulatory challenges and taxpayer concerns.
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