US IRS tax reporting for cryptocurrencies


Another colleague showed me this… it is unfortunate, because this story is all too common.

However there are options to explore- OIC being one, especially if all of his wealth was from crypto. He could also section 1031 (I do not recommend that) and push his gain to 2018 to offset his losses. I have heard of many people doing that.

That said- he needs to see a crypto tax accountant or even an attorney and discuss his options. He isn’t screwed until the IRS demands money and even then, there are still options.


Thank you for your quick reply.

OIC ? Are you a Crypto Tax accountant as well ?


OIC- offer in compromise. It is when you negotiate the tax debt with the IRS in hopes they will accept less to settle the debt.
Yes I am


Business Contact info ?


I will send you a private message so I don’t violate the forum rules.


The student might also try the option of working with a really good and dedicated accountant who can help him liquidate his holdings in 2018 and then do a loss-carryback on those results (presuming the student is getting pasted on his holdings this year like everyone else is).

An OIC (Offer in Compromise) that Rebecca mentioned is a tool in the arsenal. I think it’s just working diligently with the IRS and holding nothing back from them.

Section 1031 is almost definitely not an option out. I’d not want to take that risk and either have the IRS audit me or possibly be subjected to retroactive rules (yes, those are coming).

Oh, and the article says he traded his way to around $880K in value. Thats not hodl’ing. That’s TAXABLE!!!

Nonetheless, it will be a painful process.


Wasn’t aware. Sorry @peter


No apology required. Rebecca is in active practice (she actually prepares the returns). I’m not.

I am though sorry that I missed your earlier message. I’ve been busy with other blockchain endeavors and “took my eye off the ball”.


How to report loss in crypto investment for the 2018 tax return?
Is there a limit on how much max that you can claim from IRS?


The apology was for “Dogelord” for violating forum rules…


For corporate taxes, for individual taxes, for self employed people? Are you a USA taxpayer?

For individuals the max loss you can claim and utilize is $3,000. If you lose more than that you can carry forward that extra loss loss amount and use it in future years when you have gains.

For other situations (corporations and self employed people) please read the IRS publications on how much you can claim under your circumstances. You might start at publication 409 ( and go from there

Consult with an accountant though if you have large losses that you have doubts you’ll ever be able to utilize.


That’s so crazy unfair.

for US individual:
Assume your short term capital gain is 1 million, you pay tax 39.6% which is $396,000.
Assume your short term capital loss is 1 million for the year, and you can only claim back $3000?


Yep- however losses can offset future gains. Tax planning is crucial.


Does having the crypto tax applications help? I assume you use that in conjunction with a CPA?
Not that I have gainz right now, but I assume in the future I need to work with someone? Would working yearly with one be best? Asking for others as well. Any other insights?


Crypto tax software does help. I recommend it.

I encourage ANYONE with investments to regularly work with a CPA, EA, attorney or qualified tax professional for tax planning reasons. You don’t want to get a nasty surprise at the end of the year due to disposing of assets.


The gains are totally offset by the losses. There is no tax due here.


Well I haven’t cashed out since, I’m obviously down haha. But when I do convert to fiat, is that when to get a CPA?

How do you go about finding the right one? Do you acutally need a lawyer just to realize the gains?

Thank you Rebecca!


Can you share with the group generally where you are located? Perhaps other Pub members in your area have a suggestion.


@Peter_Rehm Good idea! I live in the Bay area, California.

I am not scared of paying taxes. I am just worried if i somehow mess up and owe if i do something wrong or whatever. Hopefully my questions help other pub members out!


Well, I’m not so sure that is true according to the pub. If at the end of the year (Dec 30th, 2017) you were in profit, you owe taxes on that profit whether you cashed out to fiat or Hodl’d. On Jan 2 2018, if the market tanked and all your gains are now negative, you still owe on the gains from 2017 even if you did not cash out. You’re basically penalized for being a Hodler. I don’t think most people have spare cash to pay the taxes on the Hold’d gains (Say you came in the market in Jan 2017 and hold’d til Dec 30th 2017) without actually cashing out to fiat, and taking profit to pay those taxes. I PRAY I’M WRONG. Hopefully someone can give a detailed correction if i’m incorrect…