Virtual Decentralized Entity Taxation Needs Real Development

Disconcertingly for founders of decentralized autonomous organizations, the IRS has not particularly addressed the taxation of DAOs as digital age entities, leaving them to default into analog partnership status or to rely on check-the-box rules. In both instances, the requirements pertaining to compliance are a point of centralization. At the time of writing, token transactions have been the subject of IRS guidance, none of it discussing the tax treatment of DAOs as taxpayers. Consequently, many DAOs are arguably tax hybrids, with Schrodinger cat-like superposition in several tax entity characterizations.

A DAO seeking certainty as to its tax status might affirmatively ...