Know The Difference Minute

When there is a regulatory gap, institutions like FTX will flourish until they don’t.

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FTX and the IRS
Welcome to the Know the Difference Minute for Wednesday, November 23rd.
It’s tax-loss harvesting season—something we’re actively doing on behalf of our clients. But what if your losses are from cryptocurrency tied up in the FTX meltdown?
Sorry to say, you’re probably out of luck. It’s true the IRS will allow you to sell your crypto losses to cancel out capital gains from winners—but it’s different with FTX.
To comply you must sell or exchange the asset. Since FTX is shut down, you haven’t been able to realize the losses. Plus, the IRS considers digital currency property, not a security.
And that’s the story. When there is a regulatory gap, institutions like FTX will flourish until they don’t. Then, everyone from the Miami Heat stadium to Tom Brady to maybe even you is left holding the bag.

I’m Dave Spano from Annex Wealth Management. That is your Know the Difference Minute.