Crypto account website closed

Assuming you held the cryptocurrency in a wallet, perhaps the best option for you would have been to sell the cryptocurrency for whatever you could get, thus realizing a loss/gain, and then report the transaction on your tax return.  However, if your purchases done through TrustInvesting were for investment purposes, you might consider claiming your loss as a theft deduction.   

Remember that you the taxpayer have the burden of proving you were the victim of a theft.  Moreover, you must be able to prove that reporting the theft for tax year 2022 was the proper year to report such theft.  In other words, you discovered the theft in 2022.  

To claim a deduction for theft, follow these steps:

1. Select the Federal Taxes tab.
2. Select Deductions & Credits.
3. Scroll down the screen to Other Deductions and Credits.
4. Select Casualties and Thefts and thereafter enter your information.

To qualify, the theft must be illegal and must be done with criminal intent.  Examples of theft include:

• Burglary (such as breaking and entering your home)
• Robbery (such as taking something with force)
• Blackmail
• Embezzlement
• Extortion
• Kidnapping for ransom
• Larceny
• The taking of money or property through fraud or misrepresentation if it is illegal under state or local law

What paperwork do I need for a theft deduction?  For your records, you should keep the following:

• Police reports for thefts
• Insurance claim forms for casualties/thefts
• Any records or documentation that support the basis and fair market value amounts used to calculate the deductible loss

@gateman