Deposit stETH into Ether.fi and you may have made a taxable disposal. Wrap the eETH you get back into weETH and you may have made another.

I'm Chris Herbst, Founder and Director at CountDeFi, a crypto tax firm built around complex reporting and forensic transaction reconstruction. I hold the GTP (Global Tax Practitioner) designation and am a member of CIBA (Chartered Institute for Business Accountants), and since 2017 our team has reconstructed restaking positions ranging from a single passive eETH holding to 4 protocols across 3 chains with reward streams in 6 tokens. I've written this guide for US restakers on EigenLayer, the LRT protocols, Symbiotic, Karak, and Solana restaking through Jito and Solayer.

I'll cover whether the LST-to-LRT swap is a disposal, how multi-AVS rewards are classified, how slashing and exploits differ, what the points airdrops did to your return, and where the general staking framework stops working.

How Does The IRS Tax Restaking?

The IRS taxes restaking under the same property rules that control ordinary staking, IRS Notice 2014-21 plus Revenue Ruling 2023-14, applied to layers those authorities never contemplated. Every restaking activity lands in 1 of 4 buckets: a taxable disposal under §1001, ordinary income at receipt, a capital loss, or a non-event.

The difficulty is that a single position touches all 4 in the same tax year.

The Property Framework Plus Rev. Rul. 2023-14

IRS Notice 2014-21 treats cryptocurrency as property, and Revenue Ruling 2023-14 confirms that staking rewards are generally ordinary income at fair market value on the block the taxpayer gains dominion and control. Together they are the closest existing framework for restaking, though neither addresses EigenLayer, liquid restaking tokens, or AVS rewards.

That framework controls each AVS reward emission separately, every points-to-token airdrop, and every LRT or wrapped variant received. It does not stop at the consensus-layer reward. The restaking layers ride on top, and each one carries its own events.

Why Restaking Is Different From Standard Staking

Standard staking generates 1 reward stream from 1 chain. Restaking generates a consensus reward plus multiple AVS reward streams in different tokens. Standard staking exposes you to 1 slashing source. Restaking exposes you to consensus slashing plus AVS slashing at potentially different rates.

The 2 differences that catch people are structural rather than volume-related:

• Standard staking does not require a disposal at deposit. LST-to-LRT restaking arguably does, under the conservative position.
• Standard staking rarely includes a points program that converts into a separate token airdrop. LRT protocols run them routinely, and each conversion is ordinary income.

The general framework in our staking rewards reporting guide handles the base case. Everything below sits on top of it.

The Reporting Gap For Restaking Activity

The gap is structural, not administrative. EigenLayer is non-custodial. Ether.fi, Renzo, Kelp, and Puffer are non-custodial. Symbiotic, Karak, Jito, and Solayer are non-custodial. None of them issues a Form 1099 of any kind, and the DeFi broker rule that might have changed that was repealed by Public Law 119-5, signed April 10, 2025. The Congressional Review Act also bars Treasury from issuing a substantially similar rule without new legislation, so this is not a gap that closes on its own.

Custodial exchanges still report. Restaking protocols do not. Restakers walk into engagement work with no third-party documents and a dozen on-chain reward streams that have to be rebuilt from the chain.

What Is Restaking And Why Is It Different From Staking?

Restaking is the architecture where staked assets, or liquid staking derivatives of them, are pledged a second time to secure additional protocols beyond the underlying chain. EigenLayer pioneered the model on Ethereum, letting restakers use ETH through native restaking or liquid staking tokens through LST restaking to back Actively Validated Services in exchange for additional rewards.

The category has expanded well beyond EigenLayer. Liquid Restaking Tokens wrap the position into a tradeable token. Symbiotic and Karak extend the model to permissionless and multi-asset restaking. Jito and Solayer bring it to Solana.

Native Restaking, LST Restaking, And LRT Restaking

Native restaking deposits ETH into EigenLayer through an EigenPod, where the ETH stays bonded to an Ethereum validator and AVS reward streams accrue on top. LST restaking deposits stETH, wstETH, cbETH, or similar into EigenLayer. LRT restaking deposits an LST or ETH into a protocol such as Ether.fi, Renzo, Kelp, or Puffer, which deposits into EigenLayer on your behalf and issues a liquid restaking token back.

The 3 modalities produce different disposal profiles, and the difference is worth understanding before you pick one:

• Native restaking is closest to a non-event, because the underlying ETH does not change form.
• LST restaking is closer to a disposal, because the LST moves to a different smart contract.
• LRT restaking is the strongest disposal case, because you receive materially different property in exchange.

The Major LRT Protocols And Their Native Tokens

The main Ethereum LRT protocols, with the caveat that TVL figures move constantly and 1 of these is in remediation:

• Ether.fi. Native LRT is eETH, which rebases, and weETH, the wrapped non-rebasing version. Ran 5 airdrop seasons of ETHFI through 2024 and 2025.
• Renzo. Native LRT is ezETH, which auto-compounds rather than rebasing. Both staking and restaking rewards compound into the token value.
• Puffer. Native LRT is pufETH, with anti-slashing mechanics through a validator-ticket architecture.
• Kelp. Native LRT is rsETH. On April 18, 2026, an attacker drained 116,500 rsETH, roughly $292 million and about 18% of circulating supply, through a compromised cross-chain bridge. Aave, SparkLend, and Fluid froze rsETH markets. Treat any pre-April Kelp position as a reconstruction problem with a possible loss claim attached, covered further down.

Each protocol issues its own airdrop token alongside the LRT. The LRT and the airdrop token are separately taxable.

Symbiotic, Karak, Jito, And Solayer

Symbiotic launched on Ethereum mainnet in January 2025 as a permissionless, modular restaking protocol supporting any ERC-20 token as collateral. Karak operates as a universal restaking layer supporting multi-asset restaking across chains. Both are alternatives to EigenLayer's ETH-centric design.

On Solana, Jito issues JitoSOL, the dominant Solana LST, and has expanded into restaking partnerships with Renzo, Fragmetric, Kyros, and Cambrian. Solayer runs Solana's largest native restaking platform and offers sSOL and sUSD as Solana-native restaking tokens.

Is The LST-To-LRT Swap A Taxable Disposal?

Many US practitioners take the conservative position that it is, because you exchange 1 property interest for another that may be materially different. The analysis draws by analogy on Cottage Savings Association v. Commissioner, though neither the IRS nor the courts have ruled on LRTs specifically. Others argue the swap is a non-taxable continuity of ownership. With no direct guidance, CountDeFi reports the conservative position.

The Conservative Position: The Swap Is A Disposal

Depositing stETH or ETH into an LRT protocol is a disposal under IRC §1001 and Cottage Savings, in exchange for the LRT. Gain or loss is the fair market value of the LST at deposit minus your basis in it.

That generates a Form 8949 line at deposit. The LRT takes a cost basis equal to the LST's value at the deposit block, and that basis carries forward to the eventual unwind. Getting this right at deposit is what makes the exit calculable years later.

The Aggressive Position And Why We Do Not Take It

The aggressive position argues the LRT is a wrapper or receipt token rather than separate property, and that beneficial ownership of the LST never transferred. The IRS has not rebutted it, because the IRS has not addressed LRTs at all.

We have reconstructed positions for clients who took that route and ended up worse off on later sales, because basis was never stepped up at the swap. The position also leaves you exposed if the IRS asserts the conservative view on examination. The deferral is not free.

The Wrapping Question (eETH To weETH)

eETH rebases, so the balance grows with accrued yield. weETH does not, so the token count stays fixed and the value grows instead. The 2 tokens carry different mechanical profiles, which is what makes the wrap arguable.

The conservative position treats the wrap as a disposal under Cottage Savings, because the rebasing-to-non-rebasing change is material. The aggressive position treats it as a non-event because the economic exposure is identical. The trap is treating it as a non-event and then losing track of basis layering across positions, which is where the reconstruction cost lands later.

Filed a prior year treating the LRT swap as a non-event?

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How Are Multi-AVS Reward Streams Taxed?

Each AVS reward stream is a separate ordinary income event at fair market value on the receipt block under Revenue Ruling 2023-14. EigenLayer operators register on multiple AVSs and route rewards to delegators, so a single restaker can earn in 5 different tokens across 5 different AVSs on 5 different schedules.

Every stream is its own Schedule 1, Line 8 entry. Aggregating them is the real reporting work.

Each AVS Pays Differently

AVSs pay on their own schedules and in their own tokens. Some pay in EIGEN. Some pay in their own native token. Some pay in WETH, USDC, or another base asset. Some pay daily, others on irregular cadences.

The practical effect is dozens of separate ordinary income lines per year per AVS. We typically aggregate daily per AVS per token, with value pulled from a consistent pricing source on the receipt block, because a mixed pricing methodology is 1 of the first things that unravels under examination.

The Aggregation Problem In Practice

Rewards arrive at the LRT contract level for LRT holders, or at the operator level for native and LST restakers, then reach you in different forms. Renzo's ezETH auto-compounds, so rewards never appear as separate transfers. Ether.fi's eETH accrues through rebasing. Puffer and Kelp follow different patterns again.

What makes restaking tax hard is not the rule. It is the data. The reward stream has to be rebuilt from the chain plus each protocol's distribution mechanics, and those mechanics differ across every protocol you hold.

Cost Basis On Each Received Token

Each reward token takes a cost basis equal to its value in USD at the receipt block. That basis carries forward to the eventual disposal of the reward token, which is its own capital event on Form 8949.

Failing to step up basis at each receipt is the single most common restaking reporting mistake. The income gets taxed once at receipt, then the full sale proceeds get taxed again at disposal, because the step-up was never recorded. Restakers pay twice on the same tokens through a bookkeeping failure rather than a legal one.

How Is Multi-Layer Slashing Taxed?

Slashing produces a capital loss at each layer, measured against basis in the slashed assets. Consensus-layer slashing and AVS-layer slashing are separate events with separate loss attributions. The EigenLayer Redistribution upgrade, live on mainnet since July 2025, adds a wrinkle, because slashed funds can now be redistributed rather than burned.

Slashing has been rare in the EigenLayer ecosystem so far, which is the only reason audit risk here has stayed low. Redistribution may change that.

Slashing At The Ethereum Consensus Layer

Many practitioners treat consensus-layer slashing as a capital loss equal to basis in the slashed ETH. The ETH is burned by the protocol, and the restaker reports the loss on Form 8949 with zero proceeds.

For a native restaker on EigenLayer, this is the same event as for any other Ethereum validator. The restaking layer above does not change it.

Slashing At The AVS Layer

AVS-layer slashing is treated as a separate capital loss, measured against basis in the slashed restaked position, which may be ETH for native restakers or an LRT for LRT holders. Different AVSs impose different slashing percentages, and in some configurations multiple AVSs can slash for the same misbehavior.

Each slashing event is its own Form 8949 line. Basis has to be traced back through any intermediate disposals, which is exactly why the LST-to-LRT and wrapping positions matter years after you take them.

Redistribution And The Recipient Question

Redistribution went live on mainnet in July 2025, allowing slashed funds to be repurposed and sent to specified recipients rather than burned. In the first release, non-ETH assets including LSTs, EIGEN, USDC, and AVS tokens can be redistributed. ETH cannot.

That raises a question on the recipient side. A party receiving redistributed slashed funds arguably has ordinary income at value on receipt, under the same accession-to-wealth analysis that governs airdrops and forks. The slashed restaker has the capital loss, the recipient has the income, and the 2 events are paired but separately reported.

Protocol Exploits Are Not Slashing

Slashing is a protocol penalty applied to your position by design. An exploit is a theft, and the tax treatment is not the same. The distinction became concrete for restakers in April 2026, when the Kelp bridge drain left wrapped rsETH unbacked across more than 20 networks and major lending markets froze rsETH.

The 2 routes diverge sharply for individuals:

• A slashing loss is a capital loss, reported on Form 8949 against basis in the slashed asset.
• A theft loss for an individual is governed by IRC §165, and since the 2017 Tax Cuts and Jobs Act, personal casualty and theft losses are generally not deductible for tax years 2018 through 2025 unless they arise from a federally declared disaster or qualify as a transaction entered into for profit.

That profit-motive carve-out is where most restaking exploit claims live, and it is fact-specific enough that it needs real analysis rather than a rule of thumb. Timing matters too: a loss is generally claimed in the year there is no reasonable prospect of recovery, which for a protocol still pursuing recovery may not be the year of the hack. If you held rsETH through April 2026, treat the position as open rather than settled, and read this alongside our guidance on claiming crypto losses from hacks and scams. Do not net an exploit loss against AVS reward income as though it were slashing.

How Are Restaking Points Programs Taxed?

Most practitioners treat restaking airdrops as ordinary income at fair market value on the airdrop block, when the recipient obtains dominion and control over transferable tokens. Revenue Ruling 2019-24 supplies the dominion-and-control principles, though it concerns hard forks and related airdrops rather than modern incentive programs, so it applies by analogy rather than directly.

Ether.fi ran 5 ETHFI seasons. Renzo distributed REZ. Kelp ran point seasons leading to KEP. Puffer ran similar programs leading to PUFFER. Each is a separate income event.

Points Are Not Themselves Taxable Until Conversion

Points issued during the accumulation phase, including Ether.fi Loyalty Points, Renzo ezPoints, Kelp Kepoints, and Puffer Carrots, are generally not taxable at issuance, because they have no fair market value. They are not transferable, have no on-chain price, and have no off-chain market.

The taxable event triggers at the airdrop block, when points convert into a tradeable token. At that point you have ordinary income equal to the value of the tokens received.

The 5 Ether.fi Seasons As A Worked Example

Ether.fi ran 5 ETHFI seasons through 2024 and 2025, each distributing tokens to restakers holding eETH or weETH who met that season's criteria. Each distribution was a separate ordinary income event, taxed at the value of ETHFI on that season's airdrop block.

A restaker who held eETH across all 5 seasons has 5 separate Schedule 1 entries, plus a basis ledger on the ETHFI received. Renzo, Kelp, and Puffer follow the same shape with their own seasonal structures.

Airdrop Basis And Subsequent Disposal

The airdropped token takes a basis equal to its value at the airdrop block. That basis carries to the eventual sale or swap, which generates capital gain or loss on Form 8949.

Building airdrop ledgers across 5-plus seasons and multiple protocols is the heaviest single chunk of restaking reconciliation, and it is the work most often skipped by software that never saw the airdrop arrive.

How Are Symbiotic And Karak Multi-Asset Restaking Taxed?

Symbiotic and Karak follow the same framework as EigenLayer, applied to whatever ERC-20 asset is deposited as collateral. Symbiotic supports any ERC-20 in its vaults. Karak supports multi-asset restaking across chains. Both are non-custodial and issue no tax forms.

The framework applies modularly. The deposit-as-disposal question, the reward income, and the slashing loss all map onto each modality.

Symbiotic Vaults And Networks

Symbiotic operates through vault contracts that pool staked assets to secure networks, its equivalent of EigenLayer's AVS layer. You deposit ERC-20 collateral into a vault, the vault routes security to 1 or more networks, and networks pay rewards back to depositors.

The vault deposit is a disposal under the conservative position, because you receive a vault position token in exchange. Network rewards are ordinary income at receipt. Slashing follows the same multi-layer logic as EigenLayer.

Karak Universal Restaking

Karak operates as a universal restaking layer supporting multi-asset deposits across chains, with permissionless asset listing introduced in V2. Users deposit assets, restake through Karak, and route security to participating services.

The multi-asset model means each deposit type produces its own disposal profile and its own basis ledger. The framework matches Symbiotic. The asset diversity is what makes the reconciliation harder.

The Cross-Protocol Tracking Problem

The same restaker often runs positions across EigenLayer, Symbiotic, Karak, and Solana restaking at once, with different LSTs and LRTs feeding different vaults. The basis ledger has to follow each asset through each layer, in order.

Multi-protocol restaking is 1 of the densest reconciliation problems in current DeFi, and the cost scales with the number of protocols rather than the size of the position.

4 protocols, 3 chains, and no 1099 between them.

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How Is Solana Restaking Taxed?

Solana restaking follows the same property and dominion-and-control framework, applied to SOL and the Solana restaking layer's native tokens. Jito and Solayer are the dominant platforms.

The architecture differs from EigenLayer because Solana's MEV capture and consensus mechanics integrate more tightly with the restaking layer.

Jito And JitoSOL Restaking

Jito is Solana's largest LST issuer, with JitoSOL capturing both consensus rewards and a share of MEV revenue. Beyond LST issuance, Jito has expanded into restaking partnerships with Renzo, Fragmetric, Kyros, and Cambrian.

The SOL-to-JitoSOL conversion is a disposal under the conservative position, with JitoSOL basis equal to SOL value at conversion. Restaking layer rewards are ordinary income at receipt. The unwind on withdrawal is a separate disposal.

Solayer And Native Solana Restaking

Solayer focuses on endogenous AVSs, meaning Solana-native protocols, rather than securing external chains. It offers sSOL for Solana restaking and sUSD for stablecoin restaking.

The SOL-to-sSOL deposit is a disposal under the conservative position, and sSOL rewards are ordinary income at receipt. Rev. Proc. 2024-28 wallet-by-wallet basis tracking applies per Solana wallet, as covered in our broader treatment of Solana DeFi reporting.

MEV Capture And The Reward Stream Question

The Solana restaking layer captures MEV through Jito's validator software and distributes that revenue to JitoSOL holders. For tax purposes the MEV-derived reward is the same as any other staking-style reward: ordinary income at value on receipt.

Clients regularly assume the MEV component is somehow different from the consensus-reward component. It is not. The framework collapses both into the same ordinary income line.

How Are Restaking Taxes Handled In AU, CA, UK, And DE?

Restaking is globally accessible and non-custodial, so treatment depends on your residency rather than where the protocol sits. Each of the 4 secondary markets covered here handles restaking under its own DeFi staking framework.

Germany deserves a note of its own. The BMF letter of March 6, 2025 replaced the May 2022 letter and introduced an active-versus-passive staking distinction, with native restakers more likely to fall on the active side and passive LRT holders on the passive side. It also confirmed that staking does not extend the holding period to 10 years, which resolves a question that hung over German stakers for years.

The cross-border complexity lives in the dual-jurisdiction reconciliation rather than in any single country's rules, which is where most of our cross-border restaking work goes.

Do You Need A Restaking Tax Specialist?

Most active restakers do, because the disposal question, the multi-AVS classification, the multi-layer slashing analysis, the points airdrops, and the cross-protocol reconciliation together push the workload past what general crypto tax software handles cleanly. Light activity on a single protocol usually does not need help.

The honest test is whether the classification and the basis ledger hold up on examination, not whether the totals look plausible on a spreadsheet.

When You Probably Don't

• Native restaking on EigenLayer only, with no LRT layer and no multi-AVS exposure
• A single LRT position held passively through 1 tax year with no airdrop claims
• No Symbiotic, Karak, or Solana restaking activity
• No prior-year unreported restaking activity

When You Probably Do

• Multiple LRT positions across Ether.fi, Renzo, Kelp, or Puffer at the same time
• Multi-AVS exposure with reward streams in 5 or more tokens
• Points-to-token airdrop receipts across 2 or more protocols
• Symbiotic, Karak, Jito, or Solayer activity alongside EigenLayer
• Slashing events at either layer, or an rsETH position held through April 2026
• Cross-jurisdiction filing as a US person resident in Australia, Canada, the UK, or Germany
• Prior-year restaking activity never reported, or filed under the aggressive non-disposal position

CountDeFi Is Your Restaking Tax Solution

Restaking reporting sits on a layered problem: the disposal question at deposit, the multi-AVS reward classification, slashing across 2 layers, the Redistribution recipient question, exploit losses that are not slashing, the airdrop ledger across multiple seasons, and reconciliation across EigenLayer, Symbiotic, Karak, and Solana. No single piece of vendor software handles all of it, because no vendor sees all of it.

We are not just accountants, we are data scientists who reconstruct restaking activity across native EigenLayer, the LRT protocols, Symbiotic, Karak, and Solana restaking on Jito and Solayer. Our Precision 7™ System turns fragmented multi-protocol data into defensible Form 8949 and Schedule 1 outputs, and our crypto tax accounting service is built for exactly this kind of reconstruction. We have been doing this since 2017, and we stand behind the methodology on examination.

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Restaking is the point where crypto tax stops being a software problem and becomes a data problem. CountDeFi rebuilds restaking positions across every layer you have touched, classifies each event, and produces reporting that holds up. Start by booking a free 15-minute call with one of our crypto tax specialists, and bring whatever data you have. We will tell you what is missing and what it takes to close the gap.