Blog · 14 October 2026

Crypto Staking Rewards Tax and Form 1099-DA: Rev. Proc. 2026-20 and What US CPA Firms Should Tell Clients

By Keshav Bansal, CA

Crypto staking rewards tax questions are moving from a niche issue to a normal part of individual return prep. On October 6, 2026 the IRS issued Rev. Proc. 2026-20, a safe harbor that lets certain exchange-traded investment trusts stake digital assets without losing their trust tax status. Brokers are also reporting 2026 digital asset sales on Form 1099-DA, and Congress has two crypto tax bills moving. For US CPA firms, the practical work is the same in every case: record staking income when the client gets control of it, carry the right basis, and do not trust a blank box on a 1099-DA.

What Rev. Proc. 2026-20 actually does

Per the text of Rev. Proc. 2026-20, the IRS describes a safe harbor for trusts that otherwise qualify as investment trusts under §301.7701-4(c) and as grantor trusts. If the trust meets every listed requirement, authorizing and carrying out staking of its digital assets does not stop it from being treated as an investment trust and a grantor trust.

• It replaces earlier guidance. The revenue procedure clarifies, modifies and supersedes Rev. Proc. 2025-31, which Treasury and the IRS issued on November 10, 2025.
• It is narrow. It covers only digital assets on a permissionless network that uses a proof-of-stake consensus mechanism, and one requirement is that interests in the trust trade on a national securities exchange.
• There is a six-month window. A trust that acts within six months after October 6, 2026 to meet the requirements, for example by amending its trust agreement to authorize staking, will not lose its status for doing so. After that six-month period, no trust may rely on the Rev. Proc. 2025-31 safe harbor.
• Effective date. The revenue procedure is effective for tax years ending on or after October 6, 2026.
• No wider inferences. The IRS says no inferences should be drawn about matters it does not expressly address, including whether staking income is effectively connected income or unrelated business taxable income, and the treatment of forks and airdrops.

Most CPA firm clients will never sponsor one of these trusts, but clients who hold crypto exchange-traded products may see staking in fund disclosures and ask how their own staking is taxed.

How individual staking rewards are taxed

The core rules your preparers apply have not changed with Rev. Proc. 2026-20:

• Digital assets are property. Notice 2014-21 treats them as property, not currency, so general property tax principles apply.
• Rewards are ordinary income on control. Under Rev. Rul. 2023-14, a cash-method taxpayer who stakes and receives rewards includes their fair market value in gross income in the year the taxpayer gains dominion and control over them.
• That value becomes basis. The fair market value included in income is the client's basis in the reward units, so a later sale or swap produces a capital gain or loss measured from that figure.
• Rewards are not a sale. Form 1099-DA reports broker sales and exchanges. Receiving a staking reward is not a sale, so do not expect the reward income itself to appear on that form.

For your organizer, the takeaway is simple. Ask every crypto client whether they staked, through which platform, and for a record of each reward with its date and value at receipt.

Form 1099-DA: covered versus noncovered basis

The IRS Instructions for Form 1099-DA set out which sales carry basis reporting. For sales after 2025 brokers must report gross proceeds for all digital assets, but cost basis only for covered securities, meaning assets acquired after December 31, 2025 and held in the same custodial account until sale.

Per the instructions, a noncovered security is any digital asset that is not a covered security, including:

• a digital asset acquired before 2026;
• a digital asset transferred in to the broker providing custodial services; and
• any digital asset the broker did not provide custodial services for when it was acquired.

For a noncovered sale, the broker may check box 9 and then does not have to complete the basis and date-acquired boxes. That is where returns go wrong. A blank basis box does not mean zero basis. The client still reports the correct gain or loss on Form 8949, so the firm needs the client's own lot records, especially for coins bought before 2026 or moved between wallets and exchanges.

Proceeds on a 1099-DA that don't reconcile to the return can lead to the kind of matching notice described in our IRS audit rate and CP2000 guide.

Two bills to watch, neither of them law

• Digital Asset Tax Certainty Act (H.R. 10357). Introduced September 14, 2026, and approved by the Ways and Means Committee 38–5 on September 16. Section 301 would extend the §1091 wash sale rule to traded digital assets, excluding qualified US dollar stablecoins. Today crypto is not covered by the wash sale rule.
• ADAPT Act (S. 5616). Introduced September 30, 2026 by Sen. Steve Daines with Senators Scott, Lummis and Moreno and referred to Senate Finance. Per the sponsor's section-by-section summary, it goes further than the House bill, including a passive staking exclusion from UBTI, a proposed §1034 rule for spending a covered payment stablecoin that stayed within 3% of $1 with no gain or loss, and a proposed §1044 de minimis for network fees of $10 or less. Grant Thornton (October 6) flagged that its odds depend on a lame-duck session after the November 3 midterms.

Until something passes, plan year-end tax-loss harvesting and stablecoin spending under current law, and tell clients that a committee vote is not a change in the rules.

A year-end checklist for US CPA firms

• Add staking questions to the organizer. Platform, network, reward dates, fair market value at receipt, and whether rewards were restaked or sold.
• Collect lot records before January. Any coins bought before 2026 or transferred between platforms will usually arrive as noncovered sales with no basis.
• Reconcile every 1099-DA to Form 8949. Flag box 9 sales and confirm the basis source in the workpapers.
• Protect wallet and exchange data. Exchange exports and wallet addresses are client data. Keep them inside the controls in your written information security plan, and get section 7216 consent before any of it goes to an outside or offshore team.

Where this fits for Tax Brew readers

Crypto returns are usually hard because of the records, not the law: hundreds of reward entries, exchange transfers and 1099-DAs with blank basis.

If digital asset reconciliations or Form 8949 schedules are stretching your team, outsourced tax prep and bookkeeping support for US CPA firms can take the data gathering and draft schedules while your signing professionals keep the judgment calls. Email info@taxbrewglobal.com.

Check current IRS guidance: this article summarizes Rev. Proc. 2026-20 (October 6, 2026), Rev. Rul. 2023-14, Notice 2014-21, the IRS Instructions for Form 1099-DA, H.R. 10357 and S. 5616 as described in the sources named above. The two bills are not law. Confirm current rules before advising clients. This is general information, not tax or legal advice. Sources as of 14 October 2026.