Is your cryptocurrency investment a personal investment or do you maintain a business activity (such as mining)? What was the nature of the transaction. Please clarify.
In reference to a theft, note that for tax years 2018 through 2025, casualty and theft losses of personal use property are deductible only if the losses are attributable to a federally declared disaster. Could that apply to you?
IRS Publication 547 Casualties, Disasters, and Thefts, page 6 states:
Theft
A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. You don’t need to show a conviction for theft. Theft includes the taking of money or property by the following means.
- Blackmail.
- Burglary.
- Embezzlement.
- Extortion.
- Kidnapping for ransom.
- Larceny.
- Robbery.
The taking of money or property through fraud or misrepresentation is theft if it is illegal under state or local law.
Theft loss deduction limited
For tax years 2018 through 2025, if you are an individual, casualty and theft losses of personal-use property are deductible only if the losses are attributable to a federally declared disaster (federal casualty loss).
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