Tax Guidance Needed for Celsius Refund and Bankruptcy Impact

[Tom201]

I had 0.138887 BTC held in the Celsius interest-earning program, which included:

• Original BTC deposited: 0.133502 BTC
• Interest earned: 0.005385 BTC

However, following Celsius's bankruptcy on July 13, 2022, I received a refund on March 18, 2024, consisting of 0.02490483 BTC and 0.37217097 ETH. The ETH is like a new coin which I did not hold in Celsius, I have not received any other distributions. How should I handle the taxes for this scenario? Also what happens if Celsius did distribute something else in the future.

[MarilynG1]

To determine if you had a gain or loss, go to the Investment Income topic in TurboTax.   Enter the Sale Date, your original Cost Basis (purchase price), and the Proceeds (value of BTC and ETH when received). 

This becomes your new Cost Basis when these are sold.

If you receive a further refund that nets a gain over your original investment, you would report this as a Capital Gain.  You may choose to wait to report this until all assets from the bankruptcy have been distributed to determine your final Gain/Loss. 

Keep good records to document your gain/loss claims.

Click this link for discussion on Crypto Exchange Bankruptcy you may find helpful. 

[Edited 1/15/2025 | 11:22 am]