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New Member
posted Apr 6, 2023 3:53:04 AM

Withdrawals from crypto account are shown as capital loss but I just transferred the assets to hot or cold wallets, I have not sold them yet

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1 Replies
Expert Alumni
Apr 6, 2023 5:35:31 AM

You can transfer between accounts, (or wallets), and it is not reportable on your tax return, provided you didn't sell, trade, exchange or dispose of the currency, it is not a taxable event.  However, if you got a 1099-B you will have to deal with it.

 

Please provide some additional details.

  • Did you get a 1099-B?
  • Who issued it?
  • If not a 1099-B, how did you learn about the transactions?

If you did receive a 1099-B, and cannot reconcile it with the issuer, recommend you post it as it is.

You will then establish a new cost basis based on the new crypto that was acquired.

 

This is how to post it.

  1. Start at Federal
  2. Wages and Income
  3. Scroll to Investments & Savings
  4. Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B) [Start or Revisit]
  5. Did you have investment income in 2022? - Yes
  6.  Get ready to be impressed  Continue
  7. You can enter your information to import the details
  8. —----------- OR —------------------------
  9. Select Enter a different way.
  10. Choose the Box Stocks, Bonds, Mutual Funds Continue
  11. Follow the interview to post your information.

Keep records of your crypto transactions.

 

The IRS is stepping up enforcement of cryptocurrency tax reporting as these virtual currencies grow in popularity. As a result, you need to keep track of your crypto activity and report this information to the IRS on the appropriate crypto tax forms.

 

Beginning in tax year 2020, the IRS also made a change to Form 1040 and began including the question: "At any time during 2022, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?"