Here's how the BlockFi bankruptcy may affect your crypto taxes for 2022

Crypto steadfast BlockFi connected Monday filed for Chapter 11 bankruptcy, 2 weeks aft the collapse of crypto speech FTX, further complicating taxes for investors during a hard year.

BlockFi, which offers an speech and an interest-bearing custodial work for cryptocurrency, halted lawsuit withdrawals earlier the bankruptcy filing, admitting the steadfast had "significant exposure" to FTX.

However, "all of those rewards are inactive taxable," adjacent though investors presently can't entree their earnings, said Andrew Gordon, a taxation attorney, certified nationalist accountant and president of Gordon Law Group.

Officials astatine BlockFi did not instantly respond to CNBC's petition for comment.

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Despite caller losses, "gains from earlier successful the twelvemonth are inactive connected the books," Gordon said.

Typically, crypto trading is much progressive erstwhile the marketplace is going up, and that's erstwhile you are much apt to incur gains, helium said.

However, it's besides imaginable to person profits adjacent erstwhile the marketplace drops, depending connected erstwhile you bought and sold the assets.

The IRS defines cryptocurrency as property for taxation purposes, and you indispensable wage levies connected the quality betwixt the acquisition and income price. 

While buying integer currency isn't a taxable event, you whitethorn beryllium levies by converting assets to cash, trading for different coin, utilizing it to wage for goods and services, receiving outgo for enactment and more.

If you're sitting connected crypto losses, determination whitethorn beryllium a metallic lining: the accidental to offset 2022 gains oregon transportation losses guardant to trim profits successful aboriginal years, Gordon explained.

The strategy, known arsenic tax-loss harvesting, whitethorn use to integer currency gains, oregon different assets, specified arsenic year-end communal money payouts. After reducing concern gains, you tin usage up to $3,000 of losses per twelvemonth to offset regular income. 

And if you inactive privation vulnerability to the integer asset, you tin "sell and rebuy immediately," said Ryan Losi, a CPA and enforcement vice president of CPA firm, PIASCIK.

Currently, the alleged "wash merchantability rule" — which blocks investors from buying a "substantially identical" plus 30 days earlier oregon aft the merchantability — doesn't use to cryptocurrency, helium said. 

While crypto taxes are already complex, it's adjacent murkier for FTX and BlockFi customers.

"There are antithetic ways it tin beryllium treated, depending connected the facts of the case," Losi said.

You whitethorn beryllium capable to claim a superior loss, oregon "bad indebtedness deduction," and constitute disconnected what you paid for the asset. But "it should lone beryllium done erstwhile that nonaccomplishment is certain," Gordon said.

With some bankruptcy cases successful limbo, customers whitethorn opt to file for a taxation extension and hold for much details to emerge, Losi said.

"Just similar FTX we would suggest taking the 'wait and spot approach' due to the fact that the IRS requires that the nonaccomplishment is definite and successful full," Gordon said. "We don't cognize that, particularly astatine these aboriginal stages with BlockFi."