cryptocurrency scam losses -deductable?
I got **** into a horrible cryptocurrency scam a few months ago. I lost over $150,000! I purchased BTC and ETH with my real money through real crypto trading sites (Robinhood, crypto.com, coinbase), but then stupidly transferred them to the scammer's wallet address to do what they said was "contract trading" to make a significant profit. I "made" $1 million, but when it came to withdrawing any profits, I couldn't. I realized only then that I had been scammed! And I couldn't get my original money back either. I have police reports and FBI reports as proof. Can I deduct this loss under theft/loss? Do i have to be considered a day trader to qualify for this? I was trading with these scammers every day for 1.5 months ,but overall I am not a day trader. Thank you.
Answers
-
I am sorry to hear of the experience and loss of your investment money. This is still a Capital Loss situation since you were technically investing in an asset. So the treatment on your taxes will be a "Sale" of investments on the date that you realized you were scammed or you can use the date of the police reports. Your sales proceeds will be $0 and your cost basis will be the investment that you mentioned "lost over $150,000" corresponding also to the police and FBI reports. Follow this menu path: Income > Common Income > Investment and Savings (2024 software path). Then you will click add an investment and click the panel, Crypto, NFT Sales and follow the prompts to report the "Sale".
The effect is that you will have a large Capital Loss that can only be claimed at $3,000 max per year. If you have future Capital Gains, the carryover losses will absorb the gains on your tax return with the $3,000 loss result until you have used up the loss on future tax returns.
