How to Account for lost assets from Celsius

[JFAnSC]

I've seen different thoughts on how to report the impacts to the assets lent to Celsius who went bankrupt. They returned a portion of some deposited assets but others were a total loss.
1. Can I claim a total capital loss for the cost basis for the tokens that were not returned?

2. How is the best way (don't want to do anything risky) to account for the difference in the amount of Bitcoin and Ethereum I placed with Celsisus, of which I received back about 19% of what I gave them.

3. And I received some Ionic stock as part of the settlement, but I figure it would be best to treat that as a zero cost asset if it ever actually gains any value and I could liquidate it. Would that work?

Since I received my distributions in this year, I figure my 2024 return will be impacted.
Your thoughts please.

[RobertB4444]

When an investment goes bankrupt then you report the sale as a loss.  You put in the purchase date, the date that you bought the digital asset, and the purchase price, the amount that you paid for the digital asset.  (If your digital asset became worth a lot more after you paid for it and then you lost it you aren't getting a tax credit for it.  Only for the actual loss.)

Then you put in the sale date, the date that you were made aware that the original investment had become worthless, and the sale price, the amount that you were compensated for the investment becoming worthless (this can be - and often is - zero).  

In your case you received a 19% return of digital assets plus some stock as compensation for the original digital assets.  You need to enter the value of those on the day that you received them as payment received.  That value becomes the basis that you have in the new digital assets and the stock for when you sell it later.  

@JFAnSC 

[JFAnSC]

Thank you for your response RobertB4444. Much appreciated.

[Mike9241]

https://koinly.io/blog/celsius-bankruptcy-taxes/