Thank you

[malakikh]

thanks

[Opus 17]

You don't want a tax deduction for your losses?  (Note, crypto is still a bit of a gray area.  If you were holding crypto for personal use -- like buying and selling stuff -- losses are not deductible.  If you were holding it for investment purposes, losses are deductible against other gains and partially against other income.)

Most of the time, you won't run into a problem by not deducting losses.  However, if by not deducting a loss, you qualify for some benefit that you would not qualify for if you did deduct the loss, not deducting the loss could be considered tax fraud.

Also, there could be a bit of a question about whether a particular loss is a business loss or theft.  Theft losses are not deductible unless due to a federally declared disaster, like a wildfire or hurricane.  If the exchange failed because it was a badly run but otherwise legitimate business, then you could deduct your capital losses (if the assets were held for investment).  But if you lost money because the whole scheme was intentional theft (like a rug pull), that's not deductible regardless of whether the crypto was held for investment or for personal use.  

[malakikh]

 For help

[Mike9241]

https://smartasset.com/taxes/do-you-have-to-report-capital-losses 

there is also the question of what you would use as their tax basis if and when you sell the BTC and ETH. 

[Opus 17]

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@Mike9241 wrote:

https://smartasset.com/taxes/do-you-have-to-report-capital-losses 

there is also the question of what you would use as their tax basis if and when you sell the BTC and ETH. 

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I think that is the best argument to report the loss.  If you don't report the loss, then you don't have a paper trail to establish the basis of the BTC and ETH, which you will absolutely need to have if you sell those at a profit.  

[Jimrowley83]

The problem I am having is trying to figure out what my losses actually ARE. I also have the additional problem that I sold some of this crypto (both BTC and ETH) this year and turbotax is asking me for information regarding when they were purchased, etc.

Have any of you been able to figure this out?

This is driving me crazy and I don't want to end up getting audited because these guys screwed us over.

[JamesG1]

The value of the BTC and ETH when it was received is part of the return of investment to a creditor.

A January 31, 2024 press release states:

Celsius Network LLC (“Celsius” or the “Company”) announced today that it has successfully emerged from bankruptcy by completing the transactions under its confirmed plan of reorganization (the “Plan”). The Plan was overwhelmingly approved by approximately 98% of the Company’s account holders and confirmed by the Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) on November 9, 2023.

Return of investment to the creditors is addressed here.

The Plan includes the distribution of over $3 billion of cryptocurrency and fiat to Celsius’ creditors, and the creation of a new Bitcoin mining company—Ionic Digital, Inc.—which will be owned by Celsius’ creditors and will have its mining operations managed by Hut 8 Corp.

I do not know whether you agreed to participate in the bankruptcy court settlement.  I do not know whether you have received all of the distributions in payment for your investment. I do not know whether you received all of the distributions in payment for your investment in 2024 or in other years.

The basic rule is that if the original investment was worth $2,000 and the full distribution of cryptocurrency, fiat and ownership of the new mining company totals $1,500, you would report a $500 capital loss.

If the original investment was worth $2,000 and the full distribution of cryptocurrency, fiat and ownership of the new mining company totals $2,500, you would report a $500 capital gain.

@Jimrowley83 

[Jimrowley83]

My original holding with Celsius was worth $28,463.02. The value of the crypto I received from the settlement this year is $8,600.84.

I understand this means I have a roughly $20k loss here but, the issue is, I have no clue how to set it up this way in TurboTax.

I am unable to import anything from Celsius, they refuse to provide any tax forms and they have the website and app locked down so no one can access it.

I received the distribution via PayPal and immediately transferred it into my Robinhood account, but the Robinhood tax documents only have half of the information needed for those particular coins do it is giving me a bunch of "needs review" notifications.

I am hoping this part will be resolved when PayPal puts out its tax documents on the 15th, but I am completely at a loss here as to how to claim these losses.

I don't know where to input it and, due to Celsius not providing me with anything bedsides a transaction history, I don't know if I even have enough information to be able to claim these losses.