There’s no good news here. You’re basically out of luck.
Cryptocurrency has become increasingly popular in recent years, with its decentralized nature and potential for high returns attracting millions of investors worldwide. However, this digital gold rush has also come with a dark side: the rise of cryptocurrency theft.
Cryptocurrency theft is a major and growing problem. In 2023 alone, over $990 million in crypto was lost or stolen, according to Cointelegraph's Crypto Hacks database. This figure represents a significant increase from previous years, highlighting the evolving tactics of cybercriminals and the need for improved security measures.
Previously, theft losses were deductible as a miscellaneous itemized deduction on Schedule A. You would have to subtract $100 from the value of the loss, and then anything in excess of that could be deducted.
But, you would have to have your itemized deductions surpass the standard deduction to even take advantage of that.
Now? You can only deduct casualty/theft losses that are the result of a governmentally-declared federal disaster.
So if you spent $30k on crypto, then your wallet gets hacked and your crypto stolen, there are no tax-benefits you can take advantage of from that loss.
Interestingly enough, this is one of the provisions that sunset after 2025.
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