Bitcoin theft, bankruptcy recovery, and taxes

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Bitcoin theft, bankruptcy recovery, and taxes

Post by ianferrel » Wed Oct 16, 2019 6:30 pm

I had about 1 BTC go to the big bitbucket in the sky when MtGox went down, and I now have a claim in the bankruptcy proceedings. It just occurred to me that I have no idea how to account for any of this in my taxes.

A few relevant prices
basis: $4
price at time of bankruptcy: ~$400
current price: $8000

1. I didn't claim any kind of loss back in 2014 when this went down. Was I supposed to?
2. If I do recover something from the bankruptcy, is the amount I recover a gain? Is it a loss if it's less than the current market price, or the market price at the time, or only if it's less than my basis?
3. If I don't recover anything and the bankruptcy proceedings conclude, can I then count it as a loss in the tax year that the proceedings conclude? For how much?

I have been unsuccessful in searching IRS docs for this, probably because I'm using the word "bankruptcy" and everything I find relates to if I'm going through bankruptcy, but I don't know the right term to search for.

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Location: New Jersey

Re: Bitcoin theft, bankruptcy recovery, and taxes

Post by Crustus » Wed Oct 16, 2019 6:50 pm

Capital gains? Losses from theft?
And . . .

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