Bright Side of Crypto Losses

This year saw many crypto investors receive substantial losses. In addition, the IRS has new rules related to crypto transactions that previously were able to avoid reporting. But there is one bit of good news on the horizon for crypto investors whose holdings are in taxable accounts rather than tax-sheltered accounts like IRAs.

If there is a capital loss for an investor who sells their crypto, it can be used to offset future capital gains on digital assets, stocks, real estate, and other investments.

The losses can also offset up to $3,000 of income from wages per year if the investor has no capital gains, plus the losses don’t expire. If there are future capital gains, they can be offset up to the loss amount or until the offset is depleted on wages if there is no capital gain in a given year.

Crypto losses have an advantage over stock losses. IRS “wash-sale” rules for investors who sell stock at a loss and then repurchase the same or substantially identical stock within 30 days before or after the sale don’t apply to cryptocurrencies. So, if you think there is going to be a market surge, there is no need to wait.

The Whitlock Co. can help you with these and other high-net-worth tax strategies. Contact us or call today.


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