In 2017 Congress passed the Tax Cuts and Jobs Act (TCJA). Beginning with tax year 2018 through tax year 2025, you can only deduct casualty and theft losses if they’re brought about due to an event that has been declared a disaster by the U.S. president. This change essentially eliminated the theft loss deduction as it relates to stolen crypto. Although the theft deduction was eliminated, stolen crypto will be regarded as a complete loss and will be lowered by your cost basis in the asset.

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