It depends. Review the information in the link provided above and posted again here for you. Check to see if your crypto loss might qualify.
If not, it may be considered a Ponzi Scheme. The Ponzi Scheme section of Form 4684 is not available in TurboTax. TurboTax does not support tax losses from investment fraud. We recommend consulting a tax professional if you've experienced this situation. This would be Section C, form 4684.
The IRS provides two items of guidance to help taxpayers who are victims of losses from Ponzi-type investment schemes.
- Revenue Ruling 2009-9 provides guidance on determining the amount and timing of losses from these schemes, which is difficult and dependent on the prospect of recovering the lost money (which may not become known for several years).
- Revenue Procedure 2009-20 simplifies compliance for taxpayers by providing a safe-harbor means of determining the year in which the loss is deemed to occur and a simplified means of computing the amount of the loss.
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