Hello. I was hoping I could get some advice/help of what the proper way to report taxes on Blockfi bankruptcy for crypto. I will try to keep things as short and as concise as I can.
In Nov 2022, Blockfi declared bankruptcy, and distributions of recovered crypto/cash occurred in 2024.
The parties of the bankruptcy court agreed that 100% amount "recovered" would be equal to the value of the portfolio/account at the time the bankruptcy was declared.
Between February 2024-October2024, 100% was recovered.
In my case, I recovered BTC, ETH, and cash. The cash distributions were liquidated crypto that were NOT BTC nor ETH.
I also reached out to Blockfi if any tax forms would be released for 2024. They basically said no. So, it will be up to each individual to figure out their cost basis, proceeds, etc, with the transactional data they have.
Using my data, I was able to deduce each individual crypto's original cost basis and proceeds in USD, along with the selling price of crypto's for the USD cash distribution, and I was able to calculate the amount of crypto that was liquidated as a worthless investment ( i bought crypto as a pure speculative investment and had no intent of using it for payments or anything else).
For example,
Description Date Acquired Date Sold Proceeds Cost Basis Adjustments gain/loss
a b c d e f g h
0.00344779 BTC Lost Various 8/23/24 $75 $154 ?? 0 ($79)
The example above is what I managed to do for EACH crypto and cash distribution.
So the questions I have, since I'm NOT receiving a 1099-B, and I recovered crypto at a loss relative to my original cost basis, should I report this on my 8949 Part 2, Section F?
Also, for the adjustment, would it be CODE M as these are from various transactions?
Finally, to remove crypto from Blockfi, I had to pay a fee in the form of that same crypto within the Blockfi exchange to move it to another exchange.
I'm being conservative here because I'm treating it like a disposal fee and because the crypto value had changed, it triggers a capital gain. (Some sources are saying that the fee doesn't trigger a taxable event and I lowered my cost basis, but again I'm being conservative here and believe the crypto fee is more of a disposable fee in my case). Would I also report this on my 8949 Part 2, Section F?
Thank you for your time and advice.
-Mike
