Tax News You Can Use...
It is clear that losses from Cryptocurrency transactions can be offset against other capital gains incurred during a tax year. Losses in excess of those gains are limited to $3,000 and the balance must be carried forward to future years.
In the wake of the Crypto crash and downturn in the stock market this is not good news for stock traders and investors in 2022.
Beware there is an increasing trend, sparked by social media posts, claiming that losses can be claimed in full using the theory of "abandonment loss". This is a fairly aggressive approach and was centered on the sudden decline of Luna. As more alt coins find themselves in a similar death spiral it seems this theory will only gain further acceptance. Having reviewed the pertinent sections of the Internal Revenue Code we can see no basis for this treatment and join other professionals to advise clients to stay away from this position.
Written by John M Matras CPA
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