A protocol penalty that removes some staked assets for specified validator misconduct. It can reduce the value of a staking position.
Slashed units are gone, which is a loss of property. The common position treats it as a capital loss on the units removed, measured by their basis, recognized when the slashing is final. Rewards that were slashed before they were ever accessible were never income.
Under the common position, yes, as a capital loss on the units removed, in the year the slashing is final. It is not a theft loss.
Source: IRC 165
Last reviewed September 18, 2026. Tax rules change; confirm current law before acting.
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