I bought SOL with a cost basis of 200 two years ago. It’s sitting in Solflare. If I stake it, it becomes a taxable event. I’m down 70%. So would those losses carry over $3,000 per year until gone? I haven’t made any trades this year so I don’t have any profits to deduct the loss from.
My understanding is you (potentially) pay tax twice.
The $SOL earned through staking is taxed as regular income. This is the first taxable event.
Once you sell the $SOL, you then would pay short or long term capital gains tax on any profits. This is the second taxable event.
Conversely, if you sold at a loss you could write it off on your tax return ( up to $3k a year ).
Not an expert though so I’d also like advice if I’m mistaken.