How to handle CAKE unstaking


I have looked through the forum and haven’t found a satisfactory answer to this question: how do I handle the following situation?

  1. I stake 100 $CAKE from my Metamask wallet at Pancakeswap in the autostaking pool
  2. I let it accumulate for a period of time
  3. Let’s say after that period of time the 100 $CAKE has grown to 200 $CAKE
  4. Now I want to unstake the entire amount - so I unstake
  5. 200 $CAKE gets returned to my Metamask wallet

How do I classify this? If I classify the full 200 $CAKE as staking income, that means I would be paying taxes on 200 $CAKE. But this is wrong. I should be taxed on the 100 $CAKE that I earned in the pool.

I would appreciate a detailed answer to this topic. I am a paying customer.

Thanks in advance.

I suggest this article:

Hey guys! I understand your frustration with the staked and staking classifications so just to clear this out from our standpoint:

all tokens that were staked=do not classify
all tokens that came as a reward for staked tokens=staking

The reason why we don’t have more strict guidelines is because there aren’t any and they are subject to the interpretation of the different jurisdictions. That bein said, here is an article from Bloomberg providing further context on the matter:

Now, the lender could be considered to have converted their crypto for another crypto when they “stake” their money into the liquidity pool and received another token they can sell elsewhere. That is a taxable event, so in this example, just as dividends are taxable, so are tokens generated from staking activities.

However, it’s not as straight-forward as that because this transaction can also be viewed in another way; in that what the lender deposited in the liquidity pool is still their money and the tokens they receive in exchange is nothing more than a receipt. That means it is not a taxable event.

Meanwhile, on the borrower’s side, it can be argued that depositing collateral and receiving a loan in a different token form is akin to an exchange transaction, so a taxable event. Of course, usually taking a loan is not a taxable event. However, the transaction on a DeFi is unique. Unlike conventional loans, it includes depositing one currency as collateral to receive a loan in another.

If you need any tax assistance with your crypto taxes, make sure you visit ACTAN in the Hub where any of our crypto tax professionals can help you out.

If you follow the article, you should be good as the amount staked should be an internal transaction (non-taxable), and then when you get it back you would manually create another transaction back to your account and then add a manual transaction for only the interest you received and classify it as such (taxable).
This means to mark the overlapping automatic API transactions as ignored as you did your staking transactions manually instead.

Thank you @Matt . I will try and follow these instructions and get back to you if I have questions.

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