It is no secret that many relatively new investors at the cryptocurrency markets have witnessed massive financial losses which have resulted from the persisting bear market that first began in late-2017 when Bitcoin started falling from the highs of nearly $20,000.
The realized losses which resulted from this fall , nonetheless, are tax deductible in the USA, but statistics from a recent report signal that most investors who offered their Bitcoin to get a loss are not deducting it from that year's taxes.
Report: U.S. Investors That Have Sold Their Bitcoin Have Losses of Almost $1.7 Billion
The report, which was conducted by Qualtrics about the benefit of Credit Karma, examined over 1,000 American investors in late-2018, also gathered information about accomplished losses from preceding estimates regarding the amount of people had invested in, and marketed, their Bitcoin to get a reduction.
The report notes that many investors do not consider the fact that selling cryptocurrency, for a profit or to get a loss, is a taxable event, and failure to account it could result in audits that lead to investors needing to pay interest and penalties.
The survey clarified that of US investors who've lost money promoting Bitcoin at 2018, their joint realized losses will be approximately $1.7 billion, with a enormous number by all criteria.
Many Investors Don't Have Any Plans to Report Any of Their Bitcoin Profits/Losses
In addition, the report also noted that more than a third of investors have no plans to report either their crypto gains or losses.
"Only 53 percent of American bitcoin investors intend to report their own bitcoin gains or losses on their earnings, while 19% have not made their mind up yet. Separately, more than a third (35 percent ) of shareholders who sold at a loss do not plan to record," Credit Karma clarified.
The report further notes that of those 35% of investors that don't intend on reporting their losses, over a third falsely asserted that they are not required to report some of their gains or losses associated with trading and/or investing in Bitcoin.
"Of U.S. bitcoin shareholders who don't plan on reporting, 35% believe they are not required to report their own bitcoin investment gains or losses," the report explained.
This may be, in part, due to the fact that there's important unclarity about how traders must report their cryptocurrency transactions, which can be proven by the fact that over half of all of the Bitcoin investors surveyed didn't even understand they could claim a deduction for their realized losses, and over 20% stated they did not understand how to start reporting realized and unrealized profits/losses.
Until the Internal Revenue Service (IRS) begins cracking down heavily on people who don't report their own cryptocurrency trading activities and also offers traders increased clarity concerning how to report their profits and losses, it is likely that many investors will continue to prevent reporting Bitcoin-related transactions.