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Email Some investors who experienced rapid declines in the value of their cryptocurrencies during 2022 may be attempting to claim 2022 tax losses. According to the IRS’s Office of Chief Counsel, some of these investors may be out of luck. On January 13, 2023, the IRS issued ILM 202302011 (the “Memo” reproduced here) stating that the substantial devaluation of cryptocurrency alone is not enough to claim a tax loss. In reaching this conclusion, the IRS addressed such threshold questions as (1) whether a cryptocurrency taxpayer can take a tax loss, (2) when a cryptocurrency taxpayer can take a tax loss, and (3) what the character of that tax loss is. While Chief Counsel Memoranda are not binding, not taxpayer specific, and subject to change without notice, they do at least provide insight on the IRS’s perspective on tax positions. https://www.cadwalader.com/resources/articles/irs-sheds-light-on-harvesting-crypto-losses