FTX Users Can’t Count on Help From the IRS
Losing access to crypto because the exchange shuts down is different from taking a loss, which means a deduction is highly unlikely.
Not a lot of good tax options.
Photographer: Angel Garcia/Bloomberg
When market investors suffer losses — or get taken for a ride — they’re often eligible for a tax write-off to soften the blow. Users of the bankrupt crypto exchange FTX won’t be so lucky.
Here’s the difference: Let’s say you’re a crypto investor on an exchange that’s still standing. If you’ve suffered investment losses amid the market decline, you can simply sell to offset other gains and potentially take a deduction. That’s because the Internal Revenue Service allows investors to sell poor-performing crypto, just as with stocks, and use those losses to cancel out capital gains from selling better-performing assets.