If I was the victim of a cryptocurrency scam, how should I report it for my taxes?

Forum|Forum|4 years ago
March 18, 2022
3 replies
10 views

I used crypto.com as the exchange site and the trading site was adxnbit.com

TurboTax Deluxe Online

rjs

Level 15

You have to report any sales or transfers that took place in your account, the same as if you had kept the money or cryptocurrency, even if you did not initiate the transactions. Under the 2017 tax law, there is no tax deduction for theft losses in 2018 through 2025. There is an exception for Ponzi schemes, but it doesn't seem like that's what you are dealing with.

bosso3

Level 7

I think some details are important.

If the loss is a personal loss, then the loss is not deductible for Federal taxes.

However, it may be deductible on your state taxes. Don't take this next statement as gospel, but here is a site that explains it could be deductible in CA: https://www.caltax.com/forums/topic/virtual-currency-scam/ You should check with your state to determine if it is deductible on your state taxes.

If your loss is not a personal loss, rather a loss by a business, the situation may be different. I personally don't know how that would be handled.

Rickbocek

Level 2

You can report a crypto scam as a theft under Casualties and Thefts in TurboTax. There are no tax deduction for theft losses

Regardless if your loss is personal you might want to report to agencies specialised in refunds and chargebacks on losses like this . Eyes Openers. Org, however losses like this is not deductible for Federal taxes

EnzoPonte

Level 2

How legit is eyeopeners.org?

Mike9241

Level 15

Victims of fraudulent investment schemes can claim a theft loss deduction if certain conditions apply - Losses From Ponzi-Type Investment Schemes

The IRS has issued the following guidance to assist taxpayers who are victims of losses from Ponzi-type investment schemes. (note that not all losses may be from a Ponzi-type Scheme - consult a tax pro who can evaluate your situation)
• Revenue Ruling 2009-9, 2009-14 I.R.B. 735 (available at IRS.gov/IRB/2009-14_IRB#RR-2009-9).
• Revenue Procedure 2009-20, 2009-14 I.R.B. 749 (available at IRS.gov/IRB/2009-14_IRB#RP-2009-20).
• Revenue Procedure 2011-58, 2011-50 I.R.B. 849 (available at IRS.gov/IRB/2011-50_IRB#RP-2011-58).
If you qualify to use Revenue Procedure 2009-20, as modified by Revenue Procedure 2011-58, and choose to follow the procedures in the guidance, first fill out Section C to determine the amount to enter on Section B, line 28. Skip lines 19 through 27. Section C of Form 4684 replaces Appendix A in Revenue Procedure 2009-20. You don't need to complete Appendix A.

For more information, see the instructions for Section C, later, and the above revenue ruling and revenue procedures.

If you choose not to use the procedures in Revenue Procedure 2009-20, you may claim your theft loss by filling out Section B, lines 19 through 39, as appropriate

https://www.irs.gov/pub/irs-pdf/i4684.pdf

Mike9241