Cryptocurrencies: One year later...
Following the considerable rise and drop in the price of Bitcoins and similar cryptocurrencies,
here's how those who suffered losses may be able to take
advantage of the unfortunate situation for tax purposes.
When and how the losses from Bitcoins and similar
cryptocurrencies can be recognized and deducted will depend on
whether the cryptocurrencies were held as:
1. Investments on account of
capital; or
2. Inventory on account of income.
A detailed description of each scenario is outlined in our
previous publication:
A Guide to Bitcoins and Income Taxes.
Losses When Cryptocurrencies Have Been Held as Investments
When cryptocurrencies have been held as investments on account
of capital, only losses from an actual disposition, usually through
a sale or exchange, of the cryptocurrency can be utilized for
income tax purposes. Unrealized or accrued losses from a drop in
the cryptocurrency price still owned are not
