In the world tax accounting, we have this idea of constructive income.
Constructive receipts are income that has not actually been received by the taxpayer, but is taxed as though it had. Income is constructively received under the following conditions:
- The amount is made ready to taxpayer
- The taxpayer’s actual receipt is not subject to substantial limitations or restrictions
According to the IRS, the rationale for constructive receipts is that if the income is available, the taxpayer should not be allowed to postpone income recognition.
So by definition, the payouts received via Steem Power/SBD may fall under what’s known as constructive receipts.
For example, if you have a savings account which accrues monthly interest AND you can withdraw funds (including accrued interest) at any time, then, the interest for the year is constructively received even if you do not withdraw the funds
So in the context of STEEM payouts, where are we?
Well when we receive STEEM/SBD, we probably don’t convert to cash, however!
- The SBD/STEEM is made readily available
- The receipt of SBD/STEEM is not subject to substantial limitations or restrictions (we can do with it as we wish)
Even if we do not withdraw the SBD or convert to cash, because there is an open market for SBD, a fair market value can be established and a potential tax liability might be present.
Now, it’s really late right now and I’m writing this because I guess I like to get really granular when I’m like this, haha. It’s highly unlikely that the IRS will ever do a deep dive into the world of airdrops, POS dividends, crypto distributions, but I thought it’d be helpful to post this just so it could be at the back of your mind, if ever the IRS did decide to pursue.
Anyway, not trying to stir paranoia! Have an awesome week and keep on Steemin!
