Cardano
$0.05106 -4.58%
ADA · 1w

Tax implications of Staking

**Does IOHK plan to address the serious TAX burden it puts onto its stake holders?** This should be considered heavily during the creation of an incentives scheme, but no one is talking about it. *Tax Implications with staking. The hidden devil.* **The problem**: At the end of every epic (5 days), rewards are distributed to its stake holders. Which means, every person who delegates stake to the network will receive a taxable distribution in the form of ADA. This reward will have to be tracked, reported, and taxed. Each person has to figure out what the USD conversion of the ADA price is every 5 days just to calculate the distribution they recieved in USD. Then repeat and track this process for the entire tax year (approx 72 epics per year). Currently, there is no scientifically proven, credible standard of a website to find this information out (read: Coinbase and Binance are not reliable or open source). The price wildly fluctuates every day. This undue burden and headache will prevent mass adoption. It is a tax accountants worse nightmare. Not just for federal, but also for state taxes. In the USA, the federal tax code does **NOT** allow for an average of distributions received over the course of the year. A person **can not** combine the total of ADA received for one year with the average yearly price to find out their tax liabilities. Each ADA distribution has to be accounted for individually. On average, there is will be approximately 72 ADA taxable distributions per year. With the current proposed incentive scheme, even if your stake remains the same, your rewards will vary and the price will definitely be different at the end of every epic. This would prevent anyone that does not have a sizable amount of stake from contributing to the security of the network. I know for a fact, that my Mom, Dad, Brother and Sister; each of who have less than 50,000 ADA, will not delegate till this is resolved. I am going out on a limb too say t...
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