Option to NOT treat staking rewards as income

How can I use cointracker.io to track staking rewards but NOT treat those rewards as income? I see that Koinly has an option to do exactly this under “income settings” https://koinly.io/blog/irs-staking-court-case/

My accountant has advised me that I can take such a position with the IRS - that my staking rewards are actually new property created and therefore should be treated as income only on disposition, while at the same time, proactively informing the IRS that this is our interpretation of the law.

However, I do not see how I can practically track this in cointracker. Let’s say I have a wallet with continuous staking rewards. How do I tag those rewards so that cointracker continues to track the staking rewards but does not report those coins as income? I would report those coins as income only when sold.

Thank you.

In order to show no income for staking rewards, you have to edit the cost basis of each staking transaction and set them all to zero.

As your accountant probably has mentioned, this is an aggressive take on the tax code and you could be audited or be liable to pay backdated taxes if the tax code is written in the IRS’ favor.

Even Koinly suggests the following…

We recommend that while the case is on-going, you continue to treat staking rewards as income to avoid any backdated taxes should the outcome favor the IRS position. You can apply for an income tax refund as far back as three years.

In the Garret vs. United States case, the judge ruled the in the IRS’ favor but Garret is appealing. Here is what the judge said …

As stated above, the instant controversy was limited to whether Plaintiffs were entitled to a refund of taxes paid for the 2019 tax year. This particular issue is not capable of repetition as any subsequent claim for refund would necessarily apply to a different tax year.

Thanks for your reply. Indeed, important considerations.

In setting the cost basis to zero, how will CT treat those coins when I come around to selling them? I think it’ll just apply capital gains, which wouldn’t be correct - it should be treated as income on sale if the coins are “new property.”

Is there no solution in CT that is similar to Koinly?

Unfortunately, I don’t see a function like that on CoinTracker, as well.

However, I’m not sure even the Koinly feature will work the way you think. If you enable staking to not be treated as income, you’ll only pay capitals gains when it’s sold which is generally assumed your cost basis is zero.

You can provide feedback here if you’d like an enhancement: https://feedback.cointracker.io/

Good idea. I’ll ask for an enhancement. At a minimum, I’d like to avoid having to go through every staking transaction and alter the cost basis as Koinly allows.