Polygon Labs asks senators to consider apple orchard as they tax crypto

"Assume a group of farmers happens upon an apple orchard on ownerless property," Polygon Labs chief legal officer Rebecca Rettig wrote."They agree to take turns picking apples. To ensure no one cheats, each farmer is required to ante up the first 32 apples they pick. If they cheat, those apples are thrown into a river."

Polygon Labs thinks potential rewards from staking should be taxed when tokens are sold, and not as they are accrued, according to the letter. Failure to do so could result in over taxation, it argued in the Sept. 8 letter, citing what it said was a long-standing tradition in the U.S. of there not being a tax event simply for exercising dominion and control over property for which there is no previous owner.

"This uncertainty creates complex reporting issues for taxpayers, and warrants examining how the IRC can provide clearer guidance for taxpayers on the treatment of digital asset transactions," the lawmakers said in July inOthers also filed letters to Sens. Wyden and Crapo including the Tax Policy Center, the Coin Center and the Crypto Council for Innovation. Both senators lead the Senate Finance Committee, which has jurisdiction over the Treasury Department.

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