[Myrddin]

You can take the loss on your tax return.

Partially correct. You can use losses to offset gains to reduce net taxable income of investment funds. You can't take losses (stock sold at a loss) against earned income (W2) to reduce AGI for federal taxes.

I had a net investment in bitcoin of around $8,000 that was grown into 5 full bitcoins. The party handling my account magically disappeared taking my bitcoins and investment. I have little expectation of ever laying my hands on the principal or gains.

[TexasGator]

“Partially correct. You can use losses to offset gains to reduce net taxable income of investment funds. You can’t take losses (stock sold at a loss) against earned income (W2) to reduce AGI for federal taxes.”

If an investor never has any gains he shouldn’t be investing.

Unused losses can be carried over.

[TexasGator]

Thanks for clarifying that your original post was not correct.