Can I file a loss for stolen Bitcoin? I have gains that I'm reporting, but my loss is greater than my gains. How would I go about this? Is it even an option?

[Anonymous]

I sent some Bitcoin to a few fraudulent brokers and needless to say, it's never to be seen again.  Am I able to claim this against the gains I received from the Bitcoin I sold?

[Hal_Al · Accepted solution]

You may not claim the losses, as capital losses, on Schedule D. So, they can not be used against the capital gains.

A theft loss is deducted as a Casualty loss. It is only an itemized deduction, deducted on schedule A .

-You may only deduct the portion of Casualty losses that exceed 10% of AGI
and there is a $100 deductible

Yes, but the deduction has limits.

To claim a tax deductible casualty loss, you can only deduct your losses that exceed 10% of your AGI+$100. In addition, it is an itemized deduction. If you usually take the standard deduction, you'll have to now find additional itemized deductions to exceed the standard deduction. 

In TurboTax, enter at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

 -I’ll choose what I work on button

  -Scroll down to:

   --Other deductions & Credits

     ---Casualty & theft

Or type- casualty loss -in the search box

For more info, see:

http://www.irs.gov/pub/irs-pdf/i4684.pdf

[Anonymous]

Thank you so much!! That was most helpful!! I would've responded sooner, but I got very sick with all the viruses going around. Thanks again!!

[Mike9241]

a recent law change denies deductibility of theft losses unless they are related to a PONZI-type scheme.

in that case use section C of form 4684. I make no determination as to whether your loss is from a PONZI-type scheme.

[t5jabroni]

This is a scam....don't entertain this fraudster.

[JamesG1]

Your losses may be reportable as a casualty loss on IRS form 4684. 

These losses are reportable as an itemized deduction which means that you would not be able to claim the standard deduction.

Losses may only be deducted that exceed 10% of your adjusted gross income so there is a high threshold to meet.

See also here.