I know it seems like all bad news when you get suckered. But unlike that time my fiancee rented an apartment in NYC that didn't exist from a scammer with a fake key, you can actually recover a portion of your losses legally, and without bribing the NYPD out of your slush fund.
Here are (some of) the concerns you must address on your tax return, if you have a loss from one of the "lending coin ponzis", such as Bitconnect, USI-Tech, RegalCoin, HextraCoin, EthConnect, etc.
#1. You may deduct your losses on pyramid schemes entered into for-profit as a casualty/theft loss using IRS Form 4684 Casualties and Thefts.
Odd coincidence there, by the way - a Turbo Tax "pro" citing a Steemit article!
#2. You must file your losses in the year "they were discovered by the taxpayer" per TurboTax, or in some cases "when substantially realized and no form of recovery is likely". This may require....careful explanation of the facts to determine when you, personally, felt you would not receive your principal back. You'll hope that this is Fiscal Year 2017.
#3. If you do not file in Fiscal Year 2017, you're going to get hit with a nasty tax law change. Starting in 2018, you can no longer carry-back a net operating loss to previous years, recovering your previously paid taxes. You may only carry it forward indefinitely, which means you will not receive tax relief immediately and such relief will be dependent on your future earnings. One should be careful to file legally and in a timely fashion, but you definitely want to realize losses in 2017 if possible.
#4. Safe Harbor law. Use it. In exchange for giving up 5% of your claimed losses (and only claiming 95% of your loss as a deduction), the IRS essentially agrees to use the "kid gloves" on you. Safe harbor filings are excluded from many requirements of proof that could result in you being audited later for the mistakes you should have paid a crypto-accountant (which doesn't really exist, catch-22 IRS?) to not make in the first place.
Both the IRS and the courts will also look upon your case more favorably if filed under Safe Harbor, just in case you are audited (a not unlikely scenario when carrying back large losses.)
#5. File an extension if you need one; they are free and easy to get.
"OK Lexiconical, that's a lot of talking and such, but how about some step by step instructions?"
Sure. Right from the IRS, post Bernie-Madoff:
Have fun reopening those old wounds. At least you'll be paid (back) for it!
Disclosure: I am not a currently practicing accountant.
We also have a Radio Station! (click me)
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Sources: Google, @cryptotax, https://steemit.com/money/@cryptotax/was-your-bitcoin-stolen-potential-tax-benefits-for-your-loss, TaxAct, TurboTax, IRS.gov, Investopedia, Bloomberg, Steemit, ThompsonCoburn
Copyright: SmartSteem, PALNet, SPL, Tax Act, TurboTax, IRS, ThompsonCoburn
Partial original source: https://steemit.com/money/@cryptotax/was-your-bitcoin-stolen-potential-tax-benefits-for-your-loss
Ensuring you link to the exact sources adds value to your content. Seems someone at TurboTax actually took content from steemit.com. Giving credit to fellow members of the community is important.
Thank you!
Thank you everyone!
Congratulations! Your submission earned you 0.003 SBD from this bounty. You have received 0.000 SBD from the creator of the bounty and 0.003 SBD from the community!
Attempted to delete my (displayed) double comment, guess it was a bug.
Restating: Thanks SC, this was a coincidence. I completely missed Turbo Tax's citation.
Thanks.
this seems to be very good information about the tax laws. I, myself, never think think it can use to our advantage. Many people loss a ton of money for investing on this coins even me. But we all learned our lessons, if its too good to be true then it is. Tax is very scary word to someone but for someone who has a full knowledge it was nothing. To have an edge to have a know, lol. Great post @lexiconical
Wow, the tax laws you have in the U.S. are so archaic. The IRS sounds like one of the worst tax collection agencies in the world from what my friends tell me. Technology is so outdated, have to use faxes, so many people still file on paper. Your government isn't helping things either.
Congratulations! Your submission earned you 0.002 SBD from this bounty. You have received 0.000 SBD from the creator of the bounty and 0.002 SBD from the community!
Simply don't get involved in one in the first place.
Congratulations! Your submission earned you 0.001 SBD from this bounty. You have received 0.000 SBD from the creator of the bounty and 0.001 SBD from the community!
This isn't very helpful advice for this topic.
Timely and quality piece, this should of easily made it to the trending page as I am sure quite a few people would find this information quite useful... On on flip side, well the tax filing is a complicated process there appears to be some benefits... Well folks like me who suffered losses don't have the headache of filing, I miss out on the silver lining big time
Congratulations! Your submission earned you 0.001 SBD from this bounty. You have received 0.000 SBD from the creator of the bounty and 0.001 SBD from the community!
It's a very difficult process to figure your deductions this way. I helped a business who had several years of NOL handle a carryback like this and it literally took us months to reconcile expenses doing a deep dive through boxes of receipts. You don't have that problem with crypto thanks to block explorers, but you are still looking at a lot of confusing IRS form work.
Hey @beanz
Care to explain why you hit and run-flagged this article with no explanation?
Do you have something against victims of fraud receiving accurate tax information?
Do you like increasing people's tax liability to morally bankrupt governments, so they can buy more bombs and oppress more people?
The possible motivations for such a position are pretty much all bad. What's your malfunction?
Congratulations! Your submission earned you 0.001 SBD from this bounty. You have received 0.000 SBD from the creator of the bounty and 0.001 SBD from the community!
legally? wow, ok..
D.
Well if all of you invested in Steemit instead on shit coins,you all would be rich! :)
Lol. I'm ashamed to say I was in BCC, I wish I had discovered Steemit before I did BCC, I'd have abit more SP and probably zero loss.
Oh well, I guess its true what they say, everything happens for good. Steemit is actually teaching me to value hard work, commitment, persistence, communication skills and most importantly never to fall for get rich quick schemes.
This is a very relatable post. Great job!
Those who had lost funds from USI Tech & Bitconnect they can recover their losses from
a very good investment plan which is running from past 11 months.
For more INFORM follow me in steemit
@Suresh Bhuvan
"I'm ashamed to say I was in BCC,"
There's room for something crazy in every portfolio - just keep it small enough to lose!
You got that right! Thank you xo
Hi lexiconical,
Perfect timing for this the valuable tax info since I have been in ICOs that were ponzi scheme. This help me initially to least know there may be a recourse. Thanks.
You want to recover u r loss then
For more INFORM follow me in steemit
@SureshBhuvan
Thank you, but I really should have gotten this out earlier for everyone. So busy.
Extensions are free and easy to get - file for one if you need it!
Note to mention you can file an amendment for up to 3 years if you actually wanted to
Great article and very informative, thanks for sharing. I've smashed the upvote button for you!
If you are looking to get hold of some crypto without investing or mining, look into https://www.crowdholding.com. They are a co-creation platform were you get rewarded for giving feedback to crypto startups on the platform. You can earn Crowdholding's token as well as DeepOnion, ITT, Smartcash and many other ERC-20 tokens.
thanks useful post
I am glad that you gave the whole thing step by step. Thankfully I am not a victim. But seeing as tomorrow is the deadline, I hope this helps the people who need it.
The post is probably just in the nick of time for some. Thanks man.
You learn your lesson and never invest in such shady tactics which clearly can't be sustained over time.
Thanks for this helpful post @lexiconical! It's good to know these laws exist.
For those who are staring at the deadline; and, are affected by such 'investments', the extension is a great idea.
Just a little addition: For those who owe the IRS, the extension does not prevent accruing interest fees.
It's been a minute; and, I'm glad to say CONGRATULATIONS! on your engagement.
Best regards!
Peace.
Thanks for this. While I'm happy to say I don't need to know any of this myself, there are some folks I'll definitely be sharing this with who I simply could not talk out of these scams as they were unfolding.
Well done!
You got a 25.29% upvote from @postpromoter courtesy of @lexiconical!
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Quiet a story
Thanks for this article.
Thanks alot!
Very useful and informative!
upvoted and followed you..
Your post is very good!
Now look me in the eye and Follow Me @cryptopay-blogGreat work! Thanks for this post learned many new things. It really helped.
Congratulations @lexiconical!
Your post was mentioned in the Steemit Hit Parade in the following category:
It's been very tough to recover u r losses from those two ponzi schemes which were very popular in 2017.
Many people ruined their money with those two scam sites
One is USI Tech & the other is Bitconnect.
Those two sites were banned in USA
USI Tech was a kind of mining program where it was paid 1% on daily basis
whereas Bitconnect was a mlm crypocurrency of ICO in which it's highest value was $450+.
So inorder to recover u r losses from those 2 programs
There are few good mining Investment Programs where u can earn money without Mining at home
It's paying weekly basis with almost 6%
and 1 year Contracts
Investment Plans between $100-$5000 & $5001-$10000.
For more details u can inbox me
@Suresh Bhuvan in steemit or in fb
Everytime there will be always people who fall on ponzis. Bitconnect won't be the last...
its a really good information, well explained, good job pal!
And right wingers complain about overy complicated tax law smh
Who even has a slush fund??
I had to google that one lol
A bounty of 0.044 SBD has been set on this post by @dylen! You can read how they work here.
Who is the ponzi man?
Awesome article, keep doing your amazing content
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