FTX Losses Pacience Required
Taxpayers anticipating investment loss deductions from a crypto giant’s bankruptcy will need to wait and see how the proceedings conclude. They should expect an arduous process that takes time and ventures into unknow territory.
Investors are likely to incur deductible losses, however, since FTX filed Chapter 11 bankruptcy, these losses will likely not be recognizable on their tax returns until 2023 or later, once fully ruled on by the court.
As part of bankruptcy proceedings, the court will determine whether FTX’s estate will consist of investor accounts. In keeping with the scenario that customers will be named unsecured creditors as predicted by a former IRS Office of Chief Counsel.
So, stay tuned as it’s is going to be a bumpy ride for those that had accounts with FTX.