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Crypto account website closed

So, the website has closed /can't be found. the money invested is gone forever and well never see it again it looks like, the question is does this fall under Ponzi scheme or something else.

Not sure where to enter it or what form it is, using home & business but so far it hasn't ask about this situation.

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4 Replies
GeorgeM777
Expert Alumni

Crypto account website closed

We need some additional information from you in order to provide a response.  What is the name of the crypto firm/exchange?  

 

@gateman

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Crypto account website closed

Trustinvesting 

GeorgeM777
Expert Alumni

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

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**Mark the post that answers your question by clicking on "Mark as Best Answer"

Crypto account website closed

In terms of your taxes, I would definitely recommend talking to a tax professional to figure out how to handle the situation. They'll be able to advise you on what forms to fill out and where to enter the information.
In the meantime, have you thought about trying out a forex mechanical trading strategy? It's a great way to take emotion out of the equation and make more objective trading decisions. FBS has some great tips on how to create your own system, so definitely check that out if you're interested. Overall, don't let this experience discourage you from investing in the future.

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