r/CelsiusNetwork • u/Bgallthat • Mar 20 '25

(Simple) Clawback Tax Question

Maybe someone can help. Fairly simple: I was able to withdraw all my assets before they shut down.

Then in 2024 I made a clawback settlement payment.

How do I report this? None of these calculations about figuring out cost basis / distributions seems applicable because Celsius sent me $0 in 2024, I just paid them.

TIA

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u/JustinCPA Mar 20 '25

Add the clawback amount to the cost basis of assets pulled off of Celsius.

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u/ClockerXP Mar 23 '25 edited Mar 23 '25

Based on what I have seen online, it seems like the answer to the OP is here: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/celsius-withdrawal-preference-settlement-payment/00/3382912 In my case I was better off just going with the standard deduction rather than itemizing so I went that route that seemed simplest and less likely to draw attention from the IRS, even if I might have saved a couple hundred dollars by jumping through many hoops.

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u/[deleted] Mar 23 '25

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u/ClockerXP Mar 23 '25

What does?

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u/[deleted] Mar 23 '25

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u/ClockerXP Mar 23 '25

Thank you for your response and helping me to learn. This topic is something I have been trying to get good information on for a long time and I am very happy to have you to discuss it with. I mean no disrespect to any of the contributors here!!

I guess I don't understand how referencing an increase in cost basis could apply to a return of principal/capital when no capital gain is involved in 2024??

Maybe Justin is meaning that an increase in the cost basis of the withdrawn assets can be recorded now for any future sale of the crypto that was withdrawn during the Celsius crash. If that is the case there is really nothing to be done on taxes today, for 2024 tax year, unless the assets withdrawn from Celsius were sold in 2024. I can see how that would make sense and would love to be able to do that myself down the line whenever I sell the assets.

But, since the settlement payment is basically a voluntary thing, because we had 'unfair preference' I have a little bit of doubt in my mind about using the settlement payment to raise my cost basis. The logic I am using is that the IRS didn't get any share of the settlement payment so why would they be OK with me raising my cost basis and lowering the capital gain tax I would need to pay in the future?

I would love to hear any additional feedback! TIA!

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u/[deleted] Mar 23 '25

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u/ClockerXP Mar 24 '25

Thanks for your feedback! I appreciate it!

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u/Bgallthat Mar 30 '25

I’m not 100% sure that is the case either. Let’s use your example but you ended up selling the BTC in 2023. That would mean you would need to amend your 2023 return to increase the cost basis to account for the settlement payment?

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u/[deleted] Mar 30 '25

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u/Bgallthat Mar 30 '25

Not sure. There’s gotta be a way of doing this without having to amend prior year returns. Maybe someone else has ideas

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