How to Account for lost assets from Celsius

[JFAnSC]

I've seen different thoughts on how to report the impacts to the assets lent to Celsius who went bankrupt. They returned a portion of some deposited assets but others were a total loss.
1. Can I claim a total capital loss for the cost basis for the tokens that were not returned?

2. How is the best way (don't want to do anything risky) to account for the difference in the amount of Bitcoin and Ethereum I placed with Celsisus, of which I received back about 19% of what I gave them.

3. And I received some Ionic stock as part of the settlement, but I figure it would be best to treat that as a zero cost asset if it ever actually gains any value and I could liquidate it. Would that work?

Since I received my distributions in this year, I figure my 2024 return will be impacted.
Your thoughts please.

[RobertB4444]

When an investment goes bankrupt then you report the sale as a loss.  You put in the purchase date, the date that you bought the digital asset, and the purchase price, the amount that you paid for the digital asset.  (If your digital asset became worth a lot more after you paid for it and then you lost it you aren't getting a tax credit for it.  Only for the actual loss.)

Then you put in the sale date, the date that you were made aware that the original investment had become worthless, and the sale price, the amount that you were compensated for the investment becoming worthless (this can be - and often is - zero).  

In your case you received a 19% return of digital assets plus some stock as compensation for the original digital assets.  You need to enter the value of those on the day that you received them as payment received.  That value becomes the basis that you have in the new digital assets and the stock for when you sell it later.  

@JFAnSC 

[JFAnSC]

Thank you for your response RobertB4444. Much appreciated.

[Mike9241]

https://koinly.io/blog/celsius-bankruptcy-taxes/ 

[Pinkzpimp395]

So If I received 14.9% of my claim back in Ionic Stock. When I document the forced selling of one crypto into portions of BTC/ETH/ Ionic Stock can I list the stock on my crypto tax platform as cash? As in the dollar value of the stock listed at the $20/share stated? For example say I owned X amount of Solana. I list a sale of the Solana and received amount of X BTC, X ETH, $130 (to account for the Ionic stock) Will that work? I have to cost basis and everything, but just want to make sure I can account for the Ionic stock in this way since it is not even tradable or listed at present time. I figure in the future If I am able to sell the Ionic stock I will just account for the $20 received price as my starting point.

[malakikh]

ok

[Pinkzpimp395]

You have to account for any forced selling Celsius did. If you had btc and eth only and that is what you received then essentially what they give you back is just a transfer. However if you had alt coins like solana or ada or something then them giving you btc in eth is a forced sale and you have to account for that loss or gain.  I received stock so that is what I'm concerned about. No way for me to say I got stock since it's private and not listed yet. 

[RobertB4444]

You are correct.  The dollar value of the stock that you received (at the time that you received it) is treated on your tax return like it was a cash payment for the stock that you lost. 

That dollar value also becomes your new basis in the stock received for when you sell it.

@Pinkzpimp395 

[velsu]

Can we enter more than one Crypto in one Form

[MaryK4]

Yes, you can make multiple entries in the Crypto section- just select the Add button on the summary page @velsu .

[velsu]

How do I enter this stock value. Should it be added as income. Will it be 1099-B or 1099- MISC or something else.

[Pinkzpimp395]

I just added each share as a 20 dollar cash on the misc form. I actually attached it to each crypto I had on celsius. Whatever the percentage was we got back in stock. I added that percentage to each crypto I lost in celsius as reimbursement. That way it allowed me to take loss from the crypto I didn't receive back. For example, I had some btc that was lost. I showed that as a transfer from celsius to venmo as having received a certain amount of btc and also having received a certain amount of cash (as stock). 

[JamesG1]

The entries will be recorded as IRS form 1099-B transactions.  In TurboTax Premium Online:

1. Down the left side of the screen, click Federal.
2. Down the left side of the screen, click Wages & Income.
3. Click the down arrow to the right of Investments and Savings.
4. Click to the right of Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B).
5. Click Add investments.

@velsu 

[velsu]

How did you attach the 1099-MISC to 1099-B. Is there an option to attach.

[RobertB4444]

You can't attach a 1099-MISC to your return.  But you shouldn't need to - the IRS already has a copy of your 1099-MISC and you can enter the data from it.  

If you are trying to send a copy of the transactions to the IRS then you can enter the totals from the 8949 forms that you have received and then mail those in if you need to.

@velsu