FREE TOOL — NOTHING UPLOADED, NOTHING STORED

Your crypto ETF started staking. Three taxable events came with it, and your 1099-B shows none of them.

Spot ether and solana ETPs began staking in late 2025. They are grantor trusts, which means they pay no tax of their own and hand everything to you — you are treated for tax purposes as owning a pro-rata share of the coins directly. That single fact produces an ordinary-income item you were probably never paid in cash, a capital disposal that happens every single day, and a fee you cannot deduct. This page explains all three, and computes them from the file your sponsor already publishes.

What the trust structure actually does

A spot crypto ETP is a fixed investment trust. Under the grantor-trust rules the beneficial owners are treated as owning the underlying assets, so every item of income and every disposal inside the trust is yours in proportion to your shares. Nothing has to be distributed for that to be true. In November 2025 the IRS published a safe harbour confirming that a trust can stake without losing that classification, provided among other things that it distributes net staking rewards in kind or in cash at least quarterly.

EVENT ONE · ORDINARY INCOME

Rewards, whether or not you were paid

Staking rewards are included at fair market value when dominion and control is obtained. Through the trust, the trust's receipt is your receipt. A fund that pays rewards out quarterly gives you cash to pay the tax with; a fund that accretes them into net asset value gives you the income and no cash. Both are taxable. The reward units take a basis equal to the value you included — track it separately from your purchased units, because the sponsors' own worked examples do.

EVENT TWO · DAILY DISPOSAL

The sponsor fee, paid in coin

The fee is paid by selling a sliver of the underlying, every day. Because you are treated as owning the coins, that sale is yours: capital gain or loss on the difference between the proceeds and the basis of the coin sold, and a permanent reduction in your remaining basis. BlackRock's own prospectus puts it flatly — each delivery or sale of ether by the trust to pay expenses is generally a taxable event to shareholders. Over a year that is several hundred micro-disposals nobody reports to you.

EVENT THREE · THE FUNDING SALE

Selling coin to pay you your rewards

When the trust sells assets to fund a cash distribution, you are not treated as selling the reward tokens. You are treated as selling a pro-rata slice of everything the trust holds. Your blended basis is usually well below the freshly stepped-up basis of the rewards, so the funding sale throws off extra gain rather than washing against the income you just recognised. Grayscale states this in its own shareholder FAQ. It is the least intuitive part of the whole structure.

And the fee is not deductible. Permanently.

Trust expenses are miscellaneous itemized deductions. Their suspension was scheduled to lapse after 2025; the One Big Beautiful Bill Act of July 2025 struck the expiry date and moved the provision to IRC § 67(h) for tax years beginning after 31 December 2025. Any guide still telling you the deduction returns in 2026 is citing the old subsection. The net position for an individual holder: ordinary income on rewards you may not have received, capital gain on hundreds of fee sales, and nothing at all for the fee.

Work it out from the sponsor's file

Sponsors publish a per-share daily file — usually called a grantor trust tax reporting statement — with the reward value per share and the coin sold per share to cover expenses. Take the annual totals from it and put your own share count against them. We do not have your file and we do not want it; this runs entirely in your browser.

Shares you held through the year If your holding changed, run this once per period at the share count you actually held. Total staking rewards per share, USD Sum every reward column in the sponsor file — inflation, block and MEV rewards are separate columns and all of them count. Proceeds per share from coin sold for expenses, USD The sponsor fee, paid in kind. Zero is a valid answer — some trusts paid no expenses in their first stub year. Your average cost basis per coin-equivalent, as a share of proceeds, % What the coin sold for expenses cost you, as a percentage of what it sold for. 60 means you paid 60 cents for every dollar it fetched. We will not guess this.

Why your 1099-B and the sponsor statement disagree

Sometimes nothing is reported at all

Where the trust paid no expenses and made no distributions of sale proceeds, the widely-held-fixed-investment-trust rules do not require the trust or your broker to report gross proceeds of trust sales to you. The sponsor's file is the only record that exists.

When it is reported, basis is blank

My 1099-B does not show any of this. Is the sponsor's statement wrong?

Neither is wrong; they are answering different questions. Three separate mechanics pull them apart. Where the trust made no distributions and paid no expenses in cash, the regulations do not require the trust or your broker to report the gross proceeds of trust sales at all. Where trust proceeds are reported, the instructions tell the broker to leave the basis boxes blank — it goes out as a noncovered item. And the 1099-B for your own sale of shares shows what you paid for the shares, unadjusted for the daily basis reductions caused by the fee sales. Nobody adjusts that for you.

Is any of this on a Form 1099-DA?

No, and this catches people out. The broker regulations settle it with a worked example: your investment is in ownership units of a trust, and the units are not themselves digital assets even though the trust's holdings are. Units are securities, so they go on a 1099-B. The 1099-DA instructions separately say rewards and staking payments are not reported there either.

Can I deduct the sponsor fee?

No, and this is now permanent rather than temporary. Trust expenses are miscellaneous itemized deductions. The suspension that ran through 2025 was made permanent by the One Big Beautiful Bill Act in July 2025 and redesignated — for a tax year beginning after 31 December 2025 the provision is IRC § 67(h), with no expiry. So you recognise gain on every in-kind fee sale and deduct nothing for the fee that caused it.

I hold this in an IRA. Does any of it matter?

It might, and nobody has answered it. Whether staking rewards allocated through a grantor trust are unrelated business taxable income for a tax-exempt holder is expressly open — Grayscale flags it in its own FAQ and the November 2025 revenue procedure did not resolve it. A great many retail holders of these products hold them in retirement accounts. That is a question for your own adviser, and anyone giving you a confident answer today is ahead of the guidance.

What is still genuinely unsettled?

Four things at least. Whether the reward is ordinary income follows from the general inclusion rule rather than from any direct IRS holding on staking through a trust. Whether the dominion-and-control date is the trust's receipt or the date the reward leaves an unbonding queue is unaddressed, and on some networks that straddles a year end. Withholding treatment for non-US holders is open. And there is no guidance on whether the 2024 basis-allocation safe harbour reaches units you are deemed to own through a trust rather than hold in a wallet.

Hold the coins as well as the fund? Then you have two basis problems, not one.

The fund's basis moves daily and nobody tracks it for you. Your own wallets and exchanges are worse — the exchange reports proceeds and leaves the cost box blank. Rebuild both chains from your own transaction history, free, and see the corrected numbers before you file anything.

Run my free scan Why the cost box is blank →

Sources, all retrieved 28 August 2026: IRC §§ 61(a), 67(h), 671–679 · Treas. Reg. §§ 301.7701-4(c), 1.671-5, 1.6045-1(a)(19) and Example 20 · Rev. Rul. 2023-14 (dominion and control) · Rev. Proc. 2025-31 (staking safe harbour for investment trusts, effective for tax years ending on or after 10 November 2025) · 2026 Instructions for Form 1099-B · 2026 Instructions for Form 1099-DA · Pub. L. 119-21 § 70110 (permanent suspension of miscellaneous itemized deductions) · sponsor filings and grantor trust reporting statements linked beside each fund. ClearBasis is tax software, not a tax adviser; nothing here is advice, and the open questions above are open for everyone, not just for us.