A taxpayer who bought cryptocurrency in 2022 and saw its value plummet to less than a cent, but retained ownership over it at the end of the year, can't take a loss on the steep decline in value, the Internal Revenue Service's Office of Chief Counsel said in memorandum released Friday.
In Chief Counsel Advice Memorandum 202302011, dated January 17, 2023, the IRS said that such a taxpayer hasn't actually suffered a loss yet for the purposes of a deduction under Internal Revenue Code Section 165. Even if the decline in value had been a loss, the taxpayer still couldn't take the deduction because it would be categorized as miscellaneous and blocked under IRC Section 67(g), the agency said.
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Read more at: Tax Times blog