Is Crypto Income Producing Property?

Forum|Forum|2 years ago
February 10, 2024
2 replies
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Hi on Form 4684 Section B it says

SECTION B—Business and Income-Producing Property
Use Section B to figure casualty or theft gains and losses for property that is used in a trade or business or for income-producing purposes.

Is crypto income-producing property? Form 4684 instruction says things like stock, bonds, etc.

So crypto would also be since most people buy it for investment?

Income-producing property is property held for investment, such as stocks, notes, bonds, gold, silver, vacant lots, and works of art.

hxtudouAuthor

Level 2

Reading through this blog from one tax attorney: https://www.keimtaxlaw.com/how-should-you-report-your-lost-or-stolen-cryptocurrency-for-tax-purposes

So I guess lost/stolen crypto is considered personal casualty theft. Not deductible. Probably just go by what a lawyer says.

PatriciaV

Level 15

The IRS considers cryptocurrency to be property for tax purposes. Depending on the situation, cryptocurrency is taxed as:

Ordinary income, if for example, it earns a return for the holder from an income stream (similar to interest) or
A capital gain or loss from a sale of property after its value has increased or decreased.
If merely bought and held, it’s not taxed until something is done with it, such as disposal.

After the 2017 Tax Cuts and Jobs Act was passed, theft losses are no longer deductible on Form 4684. If your cryptocurrency was stolen and classifies as a theft loss, it's unlikely that you can write this off.

You can read more about the details of these rules in the IRS guidance in Pub 547, although the IRS has not made an explicit ruling on this topic.

See also the TurboTax Cryptocurrency Guide.

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john-ct

Level 5

Yes it is. Not because it produces income on its own, like interest, but because it's "held for investment" (see quote in italics below your question), but because it can produce capital gains income when sold.