Tax Treatment of Cryptocurrency Losses Suffered by Individual Taxpayers

Key Tax Considerations After Crypto Exchange Shutdown, Bankruptcy, and Scams

Recording of a 90-minute premium CLE/CPE webinar with Q&A


Conducted on Thursday, September 12, 2019

Recorded event now available

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Program Materials

This CLE/CPE webinar will guide tax counsel and advisers on the tax treatment of cryptocurrency losses for individual taxpayers. The panel will discuss critical tax rules and considerations for investors and holders of cryptocurrency, available taxpayer options in cases of crypto exchange shutdown, bankruptcy and scams, and offer methods for the reporting cryptocurrency and potential deduction of losses for taxpayers.

Description

Investments in bitcoin and other cryptocurrencies are extremely volatile and highly risky, which can result in high gains or substantial losses for taxpayers. Tax advisers for clients with cryptocurrency holdings must understand the reporting requirements for exchange transactions, the calculation of gains and losses, and any available deductions within the confines of U.S. tax law.

Cryptocurrency is digital currency using encryption techniques rather than a central bank to generate, exchange, and transfer units of currency. Investors may use "mining operations" and purchase, receive payment, or transfer crypto units to and from another user with no bank or government authority verifying the transfer of funds. There is a high volume of fraud, scams, exchange shutdowns, and bankruptcies that have driven taxpayers to consider a variety of tax reporting options and planning techniques.

Initial IRS guidance on cryptocurrency (IR 2014-36) treated all virtual currency as property rather than money for U.S. tax purposes. Any transaction involving cryptocurrency must be reported as a sale or exchange of ownership, with the taxpayer bearing responsibility for calculating and maintaining basis in their virtual currency holdings. However, there is minimal guidance regarding the reporting obligations and available methods for losses stemming from victims of fraud, scams, crypto exchange shutdowns, and bankruptcies.

Listen as our panel discusses key rules applicable to cryptocurrency taxation and reporting, tax issues stemming from crypto exchange shutdown, bankruptcy and scams, and offers tax planning considerations and techniques for investors in bitcoin and other cryptocurrencies.

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Outline

  1. Taxation of bitcoin and other cryptocurrencies
  2. Tax issues after crypto exchange shutdown, bankruptcy, and scams
  3. Tax deductions and other options
    1. Personal casualty loss deduction
    2. Bankrupt financial institution deduction
    3. Capital loss deduction
  4. Best practices and planning techniques for cryptocurrency investors

Benefits

The panel will review these and other essential issues:

  • What are the principal tax rules impacting investors and holders of bitcoin and other cryptocurrencies?
  • What are the reporting and compliance obligations for U.S. individual taxpayers?
  • What issues arise after a crypto exchange shutdown, bankruptcy, or scam?
  • What tax reporting options and deductions are available to taxpayers?
  • What are the best practices and planning techniques available to cryptocurrency investors?

Faculty

Nessler, Richard
Richard A. Nessler

Of Counsel
Winston & Strawn

Mr. Nessler is an experienced litigator in representing clients in tax litigation and IRS controversy matters. He...  |  Read More

Stein, Michel
Michel R. Stein

Principal
Hochman Salkin Toscher Perez

Mr. Stein specializes in tax controversies, as well as tax planning for individuals, businesses and corporations. For...  |  Read More

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

48 hours after event

$347

Download

48 hours after event

CPE Not Available

$347