The most common form of losses in crypto are capital losses, such as losses from trading or selling your crypto.
Crypto is subject to capital gain and loss rules in the United States. You have a capital loss when you dispose of your crypto for less than you acquired it for. The best way to claim these losses is to fully import your transaction history into CoinLedger and ensure that you have no missing or unclassified data in your account. Then, you can use the tax reports CoinLedger provides to report your losses to the IRS.
It is important to note that in order to realize a capital loss, you must incur a taxable event. In other words, you need to actually dispose of your crypto by trading or selling it away to realize a capital loss. That means that if your crypto has simply lost value while you held it (without selling it), you won’t be able to claim it as a capital loss on your taxes.
If you did dispose of your crypto, however, and are not seeing an expected capital loss in CoinLedger, we recommend trying the following troubleshooting steps:
Make sure you have fully imported your transaction history into CoinLedger, including all wallets and years of your trading history
Resync your imports to bring in recent transactions
What if I am still not seeing an expected capital loss on my tax report?
If you still don't see a capital loss after following the steps above, we recommend reviewing your transactions with the highest capital gains to see how they were calculated. To do this, please follow the steps in the drop-down menu below.
Reviewing your transactions with the highest capital gains
Reviewing your transactions with the highest capital gains
Navigate to the Tax Reports page and then scroll down to the Capital Gains Summary section. Then, click on either Short or Long Term (we suggest reviewing both). This will open up a breakdown of your capital gains for the year, and will show in detail how they were calculated.
Next, click on the Gain/Loss column twice to filter for the transactions which are increasing your capital gains the most. Here, you will see a breakdown of how CoinLedger calculated your capital gains.
If you have imported all of your transaction history into CoinLedger, including all of the exchanges you have used and all years of your transaction history, then the capital gain/loss calculations shown on your account are most likely correct.
Please note that these calculations represent capital gains from both selling your crypto for fiat AND trading your crypto for other crypto assets. Both of these are considered taxable events according to the IRS, and they will trigger capital gains or losses.
According to US law, the IRS counts crypto to crypto trades as taxable events, meaning you will always have to pay taxes on these trades. Any trade of one crypto asset for another is still a taxable event, even if you are trading a stablecoin for another crypto asset. Please see this blog for more info: https://cryptotrader.tax/blog/the-traders-guide-to-cryptocurrency-taxes
What if my crypto was stolen or lost as part of an exchange bankruptcy?
Claiming your losses from stolen crypto or crypto bankruptcies is a gray area in the world of tax compliance. You may or may not be able to write off your losses from bankruptcy depending on the specifics of your situation. Please see this guide for more information, and consult with a tax professional before making a decision.
CoinLedger is built to give you the option to report these events however you see fit, but we are not able to give out specific tax advice on these topics. For this reason we always recommend working with a tax professional before you claim a loss on your taxes for coins that you can no longer access.