Interesting. So in that case, I would assume that the tax basis would be the value of the bitcoins at the time of the theft. Either that or when I discovered it, which was a few weeks later, unfortunately for me.
No. Your tax basis would be the cost of the Bitcoins, not their value.If you buy some Bitcoins for $10, you have a $10 tax basis in those Bitcoins. Unless some subsequent event changes the tax basis, when you sell them or lose them, your tax basis is still $10. If you sell them for $50, you have a taxable gain of $40. If you lose them, you have a taxable loss of $10.
http://www.irs.gov/taxtopics/tc703.html
See also Topic 515 on theft losses. "The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero."
Of course, there's a form:
http://www.irs.gov/pub/irs-pdf/f4684.pdf
Ah, I see, thanks for clarifying. I appreciate it.
Interesting. So in that case, I would assume that the tax basis would be the value of the bitcoins at the time of the theft. Either that or when I discovered it, which was a few weeks later, unfortunately for me.
Quit assuming and start reading. Your deductible loss is what you paid for your coins, minus whatever compensation you received for losing them. Assuming your coins were not insured and you have not successfully sued Coinlenders, you have no compensation whatsoever and you can deduct the entire cost base. Which, again, is what you paid for your coins and no more.It sounds like you're trying to get the IRS to fully compensate you for your loss. This is tax fraud and you are likely to go to jail if you are caught. Do not claim a larger deduction than you are legally entitled to.
I did read what JoelKatz had to say. I just didn't comprehend it very well, obviously.
