Cryptocurrency Susbstantially Declined in Value, No Loss Sustained (IRC §165)

Jan. 13, 2023, 6:41 PM

If Taxpayer (T) owns cryptocurrency (C) that has substantially declined in value, T has not sustained a loss under I.R.C. §165 (where C wasn’t worthless, abandoned, or otherwise disposed of) because it still has value; and even if T sustained a loss under §165, the loss would be disallowed because §67(g) suspends miscellaneous itemized deductions for taxable years 2018 through 2025, the Chief Counsel’s Office advised. Each unit of C had liquidating value, though it was valued at less than one cent at the end of 2022. C continued to be traded on at least …