If crypto gets stolen, who is to pay taxes on it?

[Poem]

Say an individual A has been holding crypto and one day a hacker steels it, by transfering all of it to his own address.
Everything is without involvement of a centralized exchange.

Who will pay taxes on it?
What if it occurred a week before the reporting or tax deadline? No crypto - no taxes on capital gains. No?

What do the goverments say about this? Are they even aware of such a possibility?

 

[khinkali]

The thief needs to declare it as taxable income at the time of the theft. If the value goes up then they need to declare capital gains later when they sell it.

Seriously though, you shouldn't have any further gain or income from something once you don't have it. This varies by jurisdiction, but I am aware that in the UK you can deduct losses from your capital gains if you lose your private key and can prove it's irrevocably lost. Also if you are defrauded in some circumstances. But not if they are stolen, sadly.

Poem said:
What if it occurred a week before the reporting or tax deadline? No crypto - no taxes on capital gains. No?
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My understanding (in UK at least) is that if you have a big gain, exchange for another coin and then have that stolen you could have a lot of tax to pay. It seems unfair. It's best not to have a taxable event before losing your appreciated property.

My other concern would be convincing the tax people that you did lose the coins and didn't just fence the profits back to yourself somehow.

 

[CaptK]

khinkali said:
The thief needs to declare it as taxable income at the time of the theft. If the value goes up then they need to declare capital gains later when they sell it.
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LMAO this has made my day!!!!!!

Tell the thief, I can help him with his structure for tax efficiency 😉 ns2😵😛eek¤%&cig-:,

 

[Martin Everson]

Poem said:
Who will pay taxes on it?
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It will be you depending on what taxes are owed.

Poem said:
What if it occurred a week before the reporting or tax deadline?
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Too bad

Poem said:
No crypto - no taxes on capital gains. No?
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So I can also say then - "Sorry taxman someone stole my salary so I don't owe you any taxes" 🙄.

Poem said:
What do the goverments say about this?
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They ask where is the police report firstly.

Poem said:
Are they even aware of such a possibility?
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Yes

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Poem]

I think you're confusing money which is controled by centralized instituions and crypto which is distributed and controlled by no one, hence your false analogies.

Where are all the police reports about hundreds if not thousands cases of stolen crypto-coins? Or perhaps there're some.

Police report... you make me laugh. I could even tell the police a new address where the crypto has been transfered to, before the police opens a block explorer and discovers that by themselves. And all the police will have to do will be go grab the crypto, off a blockchain. Or go to a hacker's home. Easy, no?

They'd call Vitalik Buterin or Satoshi Nakomoto and ask them to transfer the coins back... yeah.

Last edited: Apr 29, 2021

 

[Martin Everson]

I can only offer you reality. If you want to dable in a world of fantasy its your choice 😕.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[dread pirate]

no taxes are payable unless you incurred a taxable event on the crypto such as trading. buying and hodling doesnt incur taxes.