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Generative AI: A global guide to key IP considerations
Artificial intelligence (AI) raises many intellectual property (IP) issues.
United States | Publication | August 2023
On July 31st, 2023, the Internal Revenue Service (IRS) issued a new ruling clarifying the tax treatment of cryptocurrency staking rewards.
Pursuant to Revenue Ruling 2023-14 (the Ruling), staking rewards—a process whereby cryptocurrency holders can lock up their digital assets to support a proof-of-stake blockchain network's operations and receive rewards in the form of additional digital assets when validation occurs—are now considered to be taxable income.
For purposes of the Ruling, cryptocurrency refers to convertible virtual currency or "virtual currency that has an equivalent value in real currency or acts as a substitute for real currency."
The IRS has previously clarified in Notice 2014-21 that convertible virtual currency is treated as property for US federal income tax purposes and general tax principals should apply.
For the avoidance of any remaining doubt, the Ruling makes clear that crypto investors who are earning staking rewards are required to report these earnings as part of their gross income for tax purposes. The IRS cited as the basis of its determination Section 61(a) of the Code, which provides as a general rule that realized accession to wealth should be included in gross income.
The Ruling explains "the fair market value of the validation rewards received is included in the taxpayer's gross income in the taxable year in which the taxpayer gains dominion and control over the validation rewards." The fair market value of the validation award is determined as of the date and time the taxpayer gains dominion and control over the rewards. The Ruling further clarified that it applies to both taxpayers that stake cryptocurrency directly and those that stake cryptocurrency through a centralized cryptocurrency exchange.
For example, Bob owns 100 tokens of cryptocurrency X. Transactions in X are validated by a proof-of-stake consensus mechanism. Bob stakes his 100 tokens of X and validates certain new blocks on the X blockchain. As a validation reward, he receives an additional five tokens of X. Once Bob gains dominion and control of these five X tokens (meaning he has the ability to sell or dispose of them), Bob must include the fair market value of those X as of such date in his gross income for that taxable year.
Those participating in staking activities should ensure they are properly documenting and reporting any and all validation and reward transactions.
Publication
Artificial intelligence (AI) raises many intellectual property (IP) issues.
Publication
On 21 November 2023 and following extensive consultation periods, the amendment to the Climate Delegated Act (Delegated Regulation (EU) 2021/2139 of 4 June 2021) (the Climate Delegated Act) was formally adopted by the European Commission and published in the EU Official Journal (Delegated Regulation (EU) 2023/2485 of 27 June 2023) (the Climate Delegated Act Amendment).
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