06/18/2026
Many victims of cryptocurrency scams assume the entire loss is automatically deductible on their taxes.
That is not always the case.
In some recent matters, the DOJ and FBI have been able to trace and seize portions of stolen cryptocurrency funds before they were moved offshore.
When there is a reasonable expectation that some funds may be recovered, that can directly affect how the tax deduction is calculated.
Timing and strategy matter in these cases, especially before filing a return.
In my latest article on my Tax Blog, I discuss:
✔ How partial recoveries can impact theft-loss deductions
✔ Why filing an extension may sometimes be the better approach
✔ What taxpayers should understand before claiming a crypto scam loss
If you have experienced a crypto-related loss and are unsure how it should be handled from a tax perspective, it is important to get guidance before filing.