topic 1040 Crypto Question. Answer No if being scammed? in Get your taxes done using TurboTax

1040 Crypto Question. Answer No if being scammed?

hxtudou — Tue, 24 Feb 2026 08:25:15 GMT

Hi asking here, how to answer the 1040 Crypto question in this case.

IRS guideline is not clear in case of scam.

Re: 1040 Crypto Question. Answer No if being scammed?

Critter-3 — Mon, 11 Dec 2023 18:35:26 GMT

Read page 15 ... if that doesn't cover your situation then please be more specific on your question ... https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

Re: 1040 Crypto Question. Answer No if being scammed?

hxtudou — Mon, 11 Dec 2023 19:17:16 GMT

So basically buy ETH in Coinbase --> transfer to an "exchange" --> convert to USDT --> do some trading.

Except that the "exchange" may be a scam. Asked for an upfront tax payment on the spot & many more fees when trying to withdraw to the bank. Red flags from what I read online: https://www.youtube.com/watch?v=gHpdnCTv0-g

Made 15% upfront tax payment (the "exchange" only accepts crypto payment) and many more fees.

Not able to receive the withdrawal yet of the "profit" in the "exchange" (reported to FTC, etc)

So in this case, do we still answer Yes to the 1040 question?

I guess if read the word of 1040 question literally "Disposed of a digital asset in exchange or trade for another digital asset"

If so, do we report the ETH --> USDT conversion? What about the other "profit" since technically not receiving the money?

Re: 1040 Crypto Question. Answer No if being scammed?

Critter-3 — Mon, 11 Dec 2023 19:24:35 GMT

Answer YES.

Re: 1040 Crypto Question. Answer No if being scammed?

hxtudou — Mon, 11 Dec 2023 19:41:50 GMT

Ok if I answer yes,

1) ETH --> USDT conversion, that part is easy to do.

2) for the other "profits", not able to withdraw the money (running out of money to pay the fees). Suspicious advance fee scam. Already reported to FTC, etc. So for this part, we leave this out of the return?