Lost, Stolen or Hacked Crypto - Tax Implications

[zasad@]

Very interesting discussion
https://cryptotaxcalculator.io/blog/lost-stolen-hacked-crypto-tax/
https://twitter.com/CryptoTaxHQ/status/1554950976888795137


https://twitter.com/CryptoTaxHQ/status/1554951037467119616
"In Australia, the ATO has a list of guidelines that need to be met for a crypto asset to be considered ‘stolen’ or ‘hacked’, which if met may be able to be claimed as a capital loss (3/6)"

https://twitter.com/CryptoTaxHQ/status/1554951077560479745
"In the US, unfortunately, stolen or hacked crypto cannot usually be claimed as a capital loss. We recommend talking to a local tax professional to discuss your options. (4/6)"

https://twitter.com/CryptoTaxHQ/status/1554951113556004864
"In the UK, you may have to file a Negligible Value Claim in order to claim any stolen or hacked assets as a capital loss. (5/6)"

[1713911060]

1713911060

[1713911060]

1713911060

[Poker Player]

Very interesting discussion

Indeed.

The problem lawmakers face is that it is very easy for someone to say they have lost their Bitcoin private keys , for example, and there is no way to check whether they are telling the truth or lying and have them stored in a safe a few feet underground.

If the legislation allows the simple claim that you have lost them to be counted as a capital loss, it gives a lot of scope for the declarants to cheat. On the other hand, if it is too restrictive, it can be unfair to those who have really lost the keys and have no way of proving it other than their word.

[SFR10]

@zasad@
It's indeed interesting, but it seems that the following part might no longer be the case in Australia:

• https://twitter.com/CryptoTaxHQ/status/1554951037467119616
  "In Australia, the ATO has a list of guidelines that need to be met for a crypto asset to be considered ‘stolen’ or ‘hacked’, which if met may be able to be claimed as a capital loss (3/6)"
  

  The "ATO guideline link" from that blog post leads to "Page not found" error, but I did manage to find a "snapshot of that page ^{[refer to the "Loss or theft of cryptocurrency" section]}" from April of this year!

[Anonohmon]

Very interesting discussion

Indeed.

The problem lawmakers face is that it is very easy for someone to say they have lost their Bitcoin private keys , for example, and there is no way to check whether they are telling the truth or lying and have them stored in a safe a few feet underground.

If the legislation allows the simple claim that you have lost them to be counted as a capital loss, it gives a lot of scope for the declarants to cheat. On the other hand, if it is too restrictive, it can be unfair to those who have really lost the keys and have no way of proving it other than their word.

This is why the US should simply do what most other nations have done and only charge taxes for capital gains when you actually cash out. Then there is no incentive for liars to lie. And it doesnt unfairly punish those people who are just swapping coins to move them to different wallets. 

[zasad@]

Very interesting discussion

Indeed.

The problem lawmakers face is that it is very easy for someone to say they have lost their Bitcoin private keys , for example, and there is no way to check whether they are telling the truth or lying and have them stored in a safe a few feet underground.

If the legislation allows the simple claim that you have lost them to be counted as a capital loss, it gives a lot of scope for the declarants to cheat. On the other hand, if it is too restrictive, it can be unfair to those who have really lost the keys and have no way of proving it other than their word.

This is why the US should simply do what most other nations have done and only charge taxes for capital gains when you actually cash out. Then there is no incentive for liars to lie. And it doesnt unfairly punish those people who are just swapping coins to move them to different wallets. 

This raises a very important question, what is bitcoin and other cryptocurrencies in terms of tax legislation. Could it be stocks, money, currencies, commodities?
Capital gains tax also has many disadvantages in the cryptocurrency market, because the price of coins can grow 20-30 times or decrease in a year. And tax deductions for capital reduction are limited.

[Findingnemo]

Very interesting discussion

Indeed.

The problem lawmakers face is that it is very easy for someone to say they have lost their Bitcoin private keys , for example, and there is no way to check whether they are telling the truth or lying and have them stored in a safe a few feet underground.

If the legislation allows the simple claim that you have lost them to be counted as a capital loss, it gives a lot of scope for the declarants to cheat. On the other hand, if it is too restrictive, it can be unfair to those who have really lost the keys and have no way of proving it other than their word.

This is why the US should simply do what most other nations have done and only charge taxes for capital gains when you actually cash out. Then there is no incentive for liars to lie. And it doesnt unfairly punish those people who are just swapping coins to move them to different wallets. 

It really depends on how government see the cryptocurrencies, they know it can be used to purchase things without actually converting into the fiat that maybe the reason why they implement taxation even for the crypto to crypto transaction and also is a tactical step to discourage the usage of cryptocurrencies by people and let the people to use their own paper money controlled by their authority.

We can't make the laws on our own, if we do then we will be considered as criminals who violated the laws of government so we have to ise the power of choosing the right person as the leader.