It's not uncommon for crypto assets to be lost or stolen in some way. Your exchange may have been hacked, or you may have lost access to a hardware wallet or an exchange account. It can be frustrating, but whatever the reason, we're here to help soften the blow of that loss as much as we can.
In this article:
Claiming a total loss
A total loss would mean that you completely lost possession of an asset without selling or trading it for a profit; because of this, any monetary investment in the asset was also lost. Claiming a loss means that you could see a deduction on your taxes and lower your tax liability.
At this time, the IRS hasn’t made it completely clear as to whether a lost asset can be claimed as a total loss. However, there are good arguments to be made in favor of claiming lost crypto as a total loss.
With that in mind, it will be up to you to decide if claiming a total loss is right for you. If you do choose to report lost digital assets as a total loss on your taxes.
Please Note: It will be up to you to prove to the IRS that such a loss occurred should it ever be questioned.
Recording a total loss on TaxBit
If you decide you'd like to claim a total loss on your taxes, deducting the loss from your return, then you’ll need to record a sale of the lost asset for $.001. The system won’t let you input a sale for less than that amount as a sale for $0 isn’t generally a real scenario.
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