The tax treatment of staking transactions can vary depending on your country’s tax laws and your individual situation. We recommend consulting a tax professional before changing your tax settings, as tax implications can be complex and vary by country and other factors.
Tax treatment for liquid staking
You can choose to treat liquid staking as non-taxable in your CoinTracker tax settings.
When treated as non-taxable:
- The cost basis (including fees) transfers from the outgoing token to the incoming token and stays consistent when you stake or unstake assets.
- For single-in-single-out (SISO) transactions, the acquisition date of the outgoing token transfers to the incoming token.
- For multiple-in-multiple-out (MIMO) transactions, the staking transaction date becomes the acquisition date for the incoming token.
How to update your tax settings
- Navigate to the Settings page.
- Select the Tax tab.
- Toggle on Treat liquid staking as non-taxable.
- Select a start date.
- Select an end date (optional), then select Next.
- Review your selection and select Confirm & save to finish.
To turn off this setting, toggle it off.
What to keep in mind
- Only liquid staking transactions in the effective date range will be treated as non-taxable.
- You can manually mark a transaction as taxable if needed. This flexibility helps to address edge cases and unforeseen circumstances.
How cost basis is affected by non-taxable tax treatment
Changing the tax treatment of liquid staking transactions to non-taxable keeps the cost basis constant (adjusted for fees) when assets are staked or unstaked.
Example: Applying non-taxable treatment to past transactions
Suppose your effective date for treating liquid staking transactions is January 1, 2022. What happens if you tag a transaction from 2020 as a stake and then unstake the asset in 2022?
- Effective date: January 1, 2022, with liquid staking set as non-taxable.
- In 2020, a taxable disposal applies to maintain consistency with the prior tax return:
- Cost basis: $150.
- Sale value: $395.
- Gain: $245.
- New cost basis for the staked token (LST): $395.
- In 2022, when you unstake, the LST is valued at $2,786 — but the cost basis remains $395 because the non-taxable treatment applies only starting January 1, 2022.
How the acquisition date is determined for liquid staking
Example: Single-in-single-out liquid staking
- You bought ETH on January 1, 2022.
- On January 10, 2022, you staked that ETH and received stETH as a liquid staking token. The acquisition date for the ETH remains January 1, 2022 (the original purchase date), not the staking date.
Later, on February 1, 2022, you unstaked 1 stETH and received 1 ETH back, then sold it the same day. The acquisition date for the sold ETH is still January 1, 2022, not the unstaking date.
Example: Multiple-in-multiple-out liquid staking
- You bought 1 ETH and 1 cbETH on January 1, 2022.
- You staked both on January 10, 2022, and received stETH as a liquid staking token.
- You later unstaked both and received 2 ETH on February 1, 2022, and sold it the same day.
The acquisition date for the 2 ETH remains January 10, 2022, not February 1, 2022.
Tax treatment for illiquid staking
Illiquid staking transactions are treated as non-taxable (stake or unstake). This means:
- Staking deposits (stake) are treated as outgoing transactions and marked as staked lots for the respective wallet, making them unavailable for sales, trades, or transfers.
- Staking withdrawals (unstake) are treated as incoming transactions that reduce the staked lots, making them available for sell, trade, or transfer.
- Cost basis and acquisition date information transfer as assets move between available and staked lots, retaining the original purchase details.
Important: CoinTracker applies the cost basis method set in your account when calculating gains or losses for staking and unstaking transactions. This may lead to different outcomes than what you expect. Cost basis is determined based on the overall portfolio, not by individual staking services.
For example, if you use FIFO (first in, first out) and stake ETH on three different dates, CoinTracker will treat the earliest acquired ETH as the first to be unstaked, regardless of when it was staked.
How the acquisition date is determined for illiquid staking
For single-in-single-out transactions, the acquisition date of the token you send (outflow) is transferred to the token you receive (inflow).
Example: Single-in-single-out illiquid staking
- You buy 1 ETH on January 1, 2020 for $500.
- You stake 1 ETH on December 1, 2022 — no taxable event.
- When you unstake on May 1, 2023, the 1 ETH keeps its original $500 cost basis and January 1, 2020 acquisition date.
Disclaimer: CoinTracker is provided for informational purposes and is not intended as tax, audit, accounting, investment, financial, or legal advice. For financial, tax, or legal advice, please consult your own professional. See our full disclaimer.