Bitcoin and Crypto Talk (Merged)(includes NFT)

Tapxe said
I don't think you can roll back to regular ETH once you stake it. You'd have to sell and then rebuy unless I'm mistaken. IDK if they'll do a hard fork, but that might kill on taxes.

The thing I didn't consider until after conversion was tax implications. IDK if the conversion will be considered tax able. my preliminary research says no it won't be, but who knows what the IRS will say. The other thing to consider is if you can't sell, but get the 6%, you'll have to be able to pay the tax on gains for it out of pocket with no assist. Coinbase says it won't pay out until you can sell iirc so that might not be an issue.

Correct, staking means you're committing to converting to ETH 2.0. I don't think IRS would consider the automatic upgrade as a sale of the ETH (generating a capital gain), but I don't know. I doubt IRS will issue any guidance on it, so you can probably just treat it that way and presume its fair (with very little chance of it being an issue).

The 6% would certainly be taxed as income like any interest. I think it becomes part of income (annualized) on the date of payment so if you don't get paid until it converts (and becomes free to trade), then it would be available to pay the tax.