LogoLogo
Recap HomeIRS Virtual CurrenciesUK Tax GuideSA Tax Guide
  • Cryptocurrency Tax Guide for US Individuals
    • Virtual Currency & Cryptocurrency
    • Who are Recap?
  • CRYPTOCURRENCY TAX
    • Do I Need to Pay Tax on my Crypto?
    • Which Taxes Apply?
      • Capital Gains Tax (CGT)
      • Income Tax
      • Non-Taxable Transactions
    • How Much Tax Will I Pay?
    • Capital Gains Tax
      • Calculating the Capital Gains and Losses
      • Cost Basis Methods
      • Disposal proceeds
        • Non Taxable Events
        • Taxable Events
        • Donating cryptocurrency to a charitable organization
        • Gifting cryptocurrency to another person
    • Income Tax
      • Receiving cryptocurrency from mining
      • Receiving cryptocurrency rewards
      • Forks
      • Airdrops
      • Tax on Tokenswaps and Mainnetswaps
    • Deductibles and Reducing Capital Gains
  • TRANSACTION TYPES
    • 💷Selling Crypto for Fiat
    • 🛍️Purchases using Crypto
    • 🔄Exchanging one crypto for a different crypto
    • 🎗️Donations to Qualified Charities
    • 🎁Gifts
    • 🎈Airdrops
    • 🤝Staking
    • 💸Transfers
    • 🍴Forks
    • ⛏️Mining
    • 👛Employment income
    • 🚨Lost & Stolen Crypto
    • 💧Liquidity Pools
    • 🔮Cryptoasset derivatives (CFDs, Futures and Margin Trading)
    • 💼Crypto Loans
    • 💎Lending Rewards
    • 🪞Reflections Rewards
    • 👥Referral Income
    • 💳Cashback
    • 🎨NFTs (Non Fungible Tokens)
    • 🎮Play-to-earn gaming NFTs
  • Record Keeping
  • Reporting Income and Gains to the IRS and Paying the Tax
Powered by GitBook
On this page
  • Losing private keys
  • Being defrauded
  • Lost Crypto in Recap

Was this helpful?

  1. TRANSACTION TYPES

Lost & Stolen Crypto

PreviousEmployment incomeNextLiquidity Pools

Last updated 3 years ago

Was this helpful?

Losing private keys

Losing the private key to a wallet containing your cryptoassets cannot be treated as a disposal for capital gains tax purposes. The private key still exists as part of the cryptography, albeit it is not known to the owner any more. Similarly the tokens will still exist in the distributed ledger.

The IRS considers this a theft and personal casualty loss and as such it cannot be deducted from a tax return.

Being defrauded

The IRS has not yet issued any specific guidance on crypto losses (such as scam ICOs). It may be possible to submit form 8949 claiming your cost basis and $0 in proceeds but not all tax profesionals agree about this approach. It's always best to consult a qualicfied profesional before proceeding.

If the individual can prove they did hold the cryptoasset tokens at some point (ie they received the tokens they contracted for), yet the tokens have become worthless, they can file a negligible value claim and claim a capital loss on their Tax Return. If the tokens were worthless when acquired, then a negligible value claim won’t be allowed.

However, those who did not receive the cryptoasset tokens that they paid for may not be able to claim a capital loss according to the HMRC guidance at .

Lost Crypto in

🚨
CRYPTO22450
Recap