Lost coins to a scam and tax implications

A while back, I shared this situation. I messed up big time and ended up sending 3.32 ETH, around $9000, to one of those Elon Musk crypto scams a few months ago. On my Coinbase account, it will show as a withdrawal, but the reality is I got scammed. So when I get that 1099-K or whatever tax form from Coinbase, how do I report this as a LOSS instead of profit?

The tax occur when you convert your ETH to fiat, since you said the criminal withdraw the ETH, this shouldn't affect your tax since there's no capital gain. I have no idea with The US law, but you should report your lost coins in order to avoid any confusion in the future https://www.hrblock.com/tax-center/irs/forms/form-4684/

If you convert fiat to crypto or you convert crypto to fiat, you have to pay tax. Did you convert the money from fiat to ethereum before you send it? If so you have to pay the tax. But if the money is in ethereum and you did not convert it, you have no tax to pay.

Have you got a police report filed? If not, please do so at your earliest convenience. That will help you to prove your point in case you receive a notice from IRS. If coinbase account is showing the transaction, there is a chance that you will need to prove the point in case IRS asks for it. But ideally the tax is calculated on the converted amount. But in your case, you will need some legal documents to prove your stand.

In a normal country where the presumption of innocence is respected, you should not have a problem, since the administration would be responsible for proving that you received the money in order to fine you. However, between the fact that this opens an easy legal loophole in which people can allege that they have lost their coins in an accident, like the example of the boat, and that some countries are more inquisitorial than others in this sense, the answer depends a lot on the country in which this happens to you.

To answer a question asked in the above responses, I did not convert the 3.32 ETH to cash to send it out.  It was transferred to an external Coinbase wallet, according to the people at Coinbase I spoke to.  I kept a screenshot of the transaction details, as it was just after I sent it that I began to feel the "Oh SHIT......" coming on.

If i understood you correctly, the perpetrators of this 'Elon Musk crypto scam' received the stolen funds you transferred to them from your Coinbase account on their own Coinbase account, it is strange to see scammers receiving stolen funds on kyc platforms. Did you report this loss when it happened? I know it is almost impossible to recover stolen funds, but you have nothing to lose and it was sent to a kyc platform. As for tax, if you can prove that your funds was stolen, i don't think you should have any problem.

What I'm not clear on is what he means by “external” Coinbase wallet. In any case if it is from Coinbase it should be KYC and it should be easy to catch the scammers, as you say it is a bit weird but it sounds to me that there was a scam a few months ago that was similar.

In general, crypto tax is deducted from crypto asset transactions to fiat, this is generally the law that applies in countries that implement taxation, and tax rates also vary. What you need to know and what you need to ask the tax authorities in your country is about tax policies, because tax policies on crypto assets vary and also the tax provisions, For that you need to know the tax law, as far as I know, in taxation there are exceptions, for example, like in your case, crypto assets are stolen or transferred incorrectly, that might be one of the laws to avoid tax. So, for your convenience in taxation, you must first know the tax laws and provisions that apply in your country, whether a case like yours is an exception or not, the exact answer lies with the tax authorities regarding crypto assets.

This all happened on August 13, the day that Elon Musk was going to have the long meeting with President TRUMP.  I was all excited to watch it, and when I got on youtube just before the meeting was supposed to start, I saw the supposedly fake video of Elon pushing his coin doubling thing, and that's where I pwned myself to the tune of 3.32 ETH, or $9000.  I'm still amazed I didn't at least google it first, I know better than this. When I got in touch with Coinbase reps about it, they were able to look up the transaction and that's where this talk of an external coinbase wallet comes from, that's what they said.  I tried a couple times to talk to someone and get a better answer.

So sorry about your loss, you lost a lot of money there. You fell for a crypto doubling scam and i am sure the scammers used deepfake Ai to impersonate Elon Musk and push their scam agenda, i am sure you'll be more careful next time. I can understand, it is difficult to get a favorable response from support. You have nothing to lose, so maybe you can still send them a few messages regarding it to see what happens.

As a general rule, you should have a police report that you have been defrauded by fraud and your solicitor or tax adviser will gather all the necessary documents. Your tax return will have to be amended as a result of this incident. I am not sure that the loss from this fraud will be a tax loss for you.

Good point. What is necessary is to report it to the police, without that they will not believe him. And with this, although it is not 100% sure that they will believe him, I think it will be quite sure that he will avoid problems. In a normal country where the Treasury is not very inquisitorial, once the report is made and presented, if the Treasury does not want to believe him, and therefore not accept the deduction, you should present some kind of evidence against him, which in this case it seems that they will not get.

I don't know US law, but the general rules are that a taxpayer's money they lost to fraud will not go into a tax deduction. It is not a loss by trading or investing. Therefore, the coins that this user lost as a result of fraud, reduces his assets on his tax return. And if his tax office doesn't believe him, they will have to do their own investigation and request materials from the police.  But any fraud has to be registered by the police, otherwise it's words without evidence.