Voyager Chpt 11

Forum|Forum|2 years ago
November 15, 2023
13 replies
92 views

The estate determined a "claim value" based on your total crypto holdings on the Voyage exchange prior to claiming Chpt. 11. This is from my personal claim info page.

"Your claim amount was calculated based on the U.S. dollar price of the crypto assets in your Voyager account as of July 5, 2022"

Now where it gets murky is that is your total claim value has NOT been received yet. The estate has already distributed roughly %30 percent of your total claim value back in kind but the remaining %70 is held pending future litigation with FTX etc. The initial %30 of your total claim value came back as crypto in kind but some crypto assets that were not supported in the estate liquidation where sold (on my behalf) and redistributed in the form of USDC stable coin the others were also sold (on my behalf) but came back in same form just less coins.

So two things to clarify. The coins that came back in kind there is loss meaning I have significantly less coins of that asset from the redistribution. The usdc stable coin that was retrieved for selling non supported assets by the estate is also a loss on total original value my cost basis. These issues to me seem like I should be able to claim these losses somehow. Where it gets confusing for me is the future distribution of any recoveries from chapt 11 will be in Fiat no more crypto and there is a sizable IF that even happens or they are able to win in court to fund future recoveries.

I guess what I'm not sure is what do I use as my cost basis and can I claim these losses of the 30% I got back even though I didn't sell but the estate liquidated on my behalf. There are sizable losses here for everyone involved and would help greatly to offset any future capital gains. We have gotten back part of our claim the 30% so it should on '23 tax in some form I believe but not familiar with bankruptcy. I believe this is the first case of chapter 11 involving crypto also.

The total claim page gives quite a lot of info:

coin type held | 7/5 liquidation price | quantity | claim amount

Then the June 2023 in-kind distribution claim breaks down what you got back as:

Ask the Experts - Crypto - Nov 2023

JM321

Level 2

I was also a Voyager customer, and I have the same question. Thanks for so thoroughly and clearly asking this.

Cindy4 12

Employee Tax Expert

Hi @jscryptopia !

If you do receive a settlement statement from the bankruptcy proceedings you can calculate your capital loss/gain at that time. The cost basis is the original purchase price plus any transaction fees.

If the investment becomes completely worthless it would be a miscellaneous itemized deduction, which is currently disallowed under the Tax Cuts and Jobs Act.

Here is a good resource from the Taxpayer Advocate Service:

https://www.taxpayeradvocate.irs.gov/news/tas-tax-tip-when-can-you-deduct-digital-asset-investment-losses/

Hope this helps!

Cindy

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JM321

Level 2

Hi @Cindy4 12. I read the TAS link you provided. I'm still unclear about some things:

-As @jscryptopia mentioned, in June 2023 we received a partial (about 30%) return of our crypto holdings, some in-kind, and some in USDC. What was returned was based on an equation that factored in the approx. 30%, as well as the price of the crypto on July 5, 2022. So in a sense Voyager "sold" our crypto holdings on our behalf, then paid us in crypto and USDC. So, then, how do we handle a) the in-kind crypto received, and b) the USDC received?

-It is possible we will receive further returns in fiat currency, but that is yet to be determined. How to handle this?

It seems we should be able to claim a loss for the approx. 30% for TY2023... Is this correct? And potential future returns would be dealt with in that tax year?

The challenge, for me anyway, is the "in-between" state of the Voyager bankruptcy and the fact that it is not finalized as I understand it. I don't believe there is a final "settlement statement" at this time.

Thank you.

Cindy4 12

Employee Tax Expert

Hi @JM321 !

If I'm understanding correctly, the Voyager Crypto was exchanged for USDC. Possibly you have received a statement on that transaction?

When crypto is exchanged, it's treated as a property sale with capital gains or losses. The basis of what you received would be the fair market value the day you took ownership of it. The basis of what you gave up would be your cost plus any fees related to purchasing it.

Future dispositions may be treated as property sales if you receive fiat currency. Again, your basis in what you gave up would be the cost plus any fees related to purchasing it.

Overall capital gains and losses are netted on your tax return and losses can be carried forward and even used to offset up to $3,000 of ordinary income per year.

Hope this helps!

Cindy

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