Crypto taxes on chapter 11 filed business

[Sajst]

Hi,

I bought crypto but the company filed for Chapter 11 and the interest earned on the crypto I never withdrew do I have to show that as income in the tax filing?

[DashonnonH]

Hi Sajst, I hope your day is going well.

Unfortunately, the IRS considers Interest taxable once placed in your account and available to you without penalty. Once this happens, the interest must be reported on your tax return. 

https://www.irs.gov/taxtopics/tc403 

If the company files bankruptcy and owes you money this would be considered personal bad debt. Personal Bad debt is usually reported on Schedule A as miscellaneous itemized deduction. Unfortunately, miscellaneous itemized deductions have been suspended until year 2025 and you would not be able to claim the bad debt.