I have some crypto on an exchange which filed for bankruptcy and froze all assets a while ago. The exchange has been placed in liquidation last year and a payout of remaining frozen assets might happen this year. The exchange is not situated in Japan.
As it seems the payout will presumably happen in fiat and only a part of the crypto assets can be paid out, the remaining will be a loss.
For taxation my current understanding is that:
- the timing of the payout or the unfreezing of the assets is the time of the actual loss/tax event
- I can deduct the loss from other gains I got from crypto this year, like a normal "crypto" loss
- In the case of a fiat payout
- this is an taxable event, even-though its a forced liquidation and outside of my control
- an immediate exchange of the payed out fiat currency to Yen does not cause any tax as there is no gain
I haven’t found much for the case of crypto loss due to bankruptcy in the NTA crypto policy papers.
Maybe I overlooked something, someone can correct me or is/was in a similar situation?
by LemmonSmile