I am thinking about the tax situation of PoS.
Let’s presume you have 10,000 ADA.
Say you earn staking rewards when the price is $10. But then something happens in the market and the price crashes to $0.10.
at the end of the year you wouldn’t have the cash on hand to pay the taxes unless you sold a % of your staking rewards as you earned them.
But, that would require paying attention every single day to your rewards and manually selling a % constantly. Or automate it but to do that opens a security risk to viruses or hackers.
Furthermore if you do sell a % of your ADA reward every day then according to FIFO filing that would mean you would actually be selling a % of your principle holding, not the reward. Which would be subject to capital gains. So you would be paying taxes twice.
Please can someone help me understand this or point me to someone or somewhere that can ? This is all so new that I find it difficult to locate anyone who is knowledgeable on the subject.
And before you mention stuff about “just don’t tell them” I prefer to just play by the rules but I don’t know what the rules are on this matter so I am trying to understand what they are and how they can be practically applied without creating an undue burden.
Thank you for your help
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