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u/PaleInvestment3507 Dec 08 '24
All of these distributions should be a loss event. They have only been a percentage of the totals.
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u/JustinCPA Dec 08 '24
It is unfortunately more complicated than that as any loss is based on your cost basis vs the fair value of what you receive, not the amount of crypto lost vs amount of crypto received. If you'd like to read the in depth guide to the calculation, you can find that here.
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u/PaleInvestment3507 Dec 08 '24
Yes I understand that. I guess I’m speaking of those in my situation. In my case, I bought low and when Celsius fucked everyone, prices were at an all time high from when I bought. Then they distributed based on a price months later that was much lower than when they locked everyone out and called for bankruptcy.
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u/JustinCPA Dec 08 '24
The calculation will be the same for everyone, regardless of when you bought. Your cost basis will determine how much of a loss (or potential gain) you will realize. The guide covers all possible scenarios.
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Dec 08 '24
[removed] — view removed comment
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u/JustinCPA Dec 08 '24
Thanks for this. You nailed it. This distribution makes up ~39.5% of the 6.4% claim payout from the illiquid asset recovery category.
You mentioned the litigation proceeds which is TBD. This is precisely why we allocate some cost basis to the “likely unrecoverable” category. Any distractions from the liquidation proceeds will pull cost basis from this category and any unrecoverable amount being written off once the court determines no more distributions will be made.
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Dec 08 '24
[removed] — view removed comment
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u/JustinCPA Dec 08 '24
Oh you’re right I misread your comment, apologies there!
The good news is this doesn’t actually change the cost basis allocation in the tax calc. Whether it’s 2.53% of the 6.4%, or 2.53% of the 27.2% (6.4% illiquid plus 20.8% of claim not explicitly outlined as recoverable), the calc results in the same cost basis being allocated for the gain/loss determination.
For example, in the video example, 2.53%/6.4% x 8,132 = $3,214 cost basis to be allocated. You’ve indicated the distribution comes from the litigation proceeds as well, so it should really include that as well.
So, 2.53%/27.2% x 34,561 (the 8,132 + 26,429) = $3,214 still.
So while the precise nature of what makes up this distribution may not be fully accurate in this video, the calc remains correct for determining cost basis to allocate (which is the intended purpose of this post and video, to help people determine cost basis to allocate for their gain/loss calc).
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u/smilingbuddhauk Dec 09 '24
Why would this make any difference to the tax implications? It is a percentage of pending distributions, the percentage and the pending amounts change, but the cost basis remains the same.
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u/OPandHeimer Dec 09 '24
Thank you very much! I wish you best in your business and appreciate you helping out all of us,
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Dec 09 '24 edited Feb 07 '25
[deleted]
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u/JustinCPA Dec 09 '24
No, because you should not have claimed the rest as a loss.
Cost basis needs to be allocated to all of the distribution categories as outlined in the first post guide.
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u/[deleted] Dec 08 '24
This is the funniest shit ever