Thanks for that explanation! I didn't realize I could use it to offset my regular income too. I do have some stock investments that had gains this year, so I'll definitely claim the crypto loss to help balance those out. One last question - do I need any special forms or documentation to claim this loss on my taxes? Or do I just report it as a capital loss on Schedule D?

You'll report it on Schedule D as a capital loss, just like any other investment loss. The key is making sure you have proper documentation - keep records of your original cost basis (what you paid for the crypto), any distributions you've received, and documentation from the bankruptcy proceedings showing the loss. Since you've already received $200 in distributions, you'll want to wait until you know whether more distributions are coming before claiming the full loss. If the bankruptcy court has indicated no further distributions will be made, then you can claim the remaining $600 as a capital loss for 2024. If there's a chance of additional distributions in 2025, you might want to be conservative and only claim a partial loss this year. The good news is that even if you have to spread the loss across multiple years as distributions come in, you can still benefit from the tax savings each year.

Great questions about staking rewards and pending orders! For staking rewards, you'll handle them exactly like the interest situation Jessica explained earlier. Since you already paid taxes on those rewards as income when you received them, they become part of your cost basis for the loss calculation. So if you received $500 in staking rewards over time and paid taxes on that amount, you'd add that $500 to your original investment amount when calculating your total loss. For the pending trades/limit orders that never executed - those shouldn't factor into your loss calculation at all. Since the trades never completed, you still technically owned the original crypto assets you had deposited, not whatever you were trying to trade for. Only include the actual assets that were in your account when the exchange froze. The key is to think of your loss as: (Original cost basis of all assets + Previously taxed earnings like staking rewards) - (Any distributions received or expected). This ensures you're not getting double tax benefits or missing deductions you're entitled to.

@James Maki You re'definitely not alone! I m'actually brand new to this community and dealing with the exact same situation. Filed in late January, got my refund three weeks ago, but my wage transcript is still completely empty. I was starting to think maybe my employer messed up their W-2 submission or there was some kind of system error with my SSN. It s'so reassuring to see that literally everyone here has experienced this same thing! The fact that the IRS can process returns and issue refunds without the wage data being visible on our transcripts is honestly mind-blowing to me. Thanks for posting about this - sometimes it just helps to know you re'not the only one stressing out over these things!

good to know! saving this just in case 📝

That's really helpful to know! 4 weeks sounds reasonable. I've been checking my transcript obsessively since getting the closure notice lol. Good to know about the 5-7 days after the 846 code shows up - gives me something concrete to look for. Thanks for sharing your experience! 🙏

This is such an important point that I wish more people understood! I made this exact mistake a few years ago - I owed about $300 from an amended return and thought "I'll wait for them to send me a bill." By the time I finally got a notice, it had grown to over $500 with all the penalties and compound interest. The worst part is that the interest rate the IRS charges is actually pretty high compared to what you'd get from a savings account, so there's really no financial benefit to waiting. Plus, as you mentioned, they calculate interest from the original due date, not from when you discover the debt. So even if you genuinely didn't know you owed money, you're still on the hook for all that accumulated interest. It's definitely a "pay now, ask questions later" situation when it comes to tax debts.

This is really helpful to hear from someone who went through the exact same thing! I'm definitely going to check my IRS online account today to see what the current balance is with all the accumulated interest. It sounds like even though it started at $180, it's probably grown quite a bit by now since it's been almost a year. I'm kicking myself for not knowing I was supposed to pay when I filed the amendment. My tax preparer really should have explained that better - I thought amended returns were just like regular returns where they bill you if you owe money. Now I know for next time, but this is an expensive lesson to learn! Did you have any trouble setting up the online account with the IRS? I've heard mixed things about their website being difficult to navigate.

Setting up the IRS online account wasn't too bad, but you do need to have some specific information ready. They'll ask for details from a recent tax return, your Social Security number, and they'll want to verify your identity through credit report questions or by mailing you a verification code (which takes 5-10 days). The website itself is pretty clunky and old-fashioned looking, but once you're logged in, you can see your account balance, payment history, and any notices they've sent. It's definitely worth doing because you'll be able to see exactly how much interest has accumulated on your $180. One tip: if you decide to pay online through their system, make sure to allow a few business days for the payment to process before the next interest calculation kicks in. I learned that the hard way when I thought I was cutting it close with my payment timing!

This is incredibly helpful! I had no idea about the Section 199A deduction potentially applying to rental activities. Could you explain a bit more about how that works with short-term rentals specifically? Also, you mentioned quarterly estimated tax adjustments - how quickly should someone in OP's situation start making those changes? I imagine with a $650k income, the quarterly payments are already pretty substantial, so getting this wrong could be costly. The point about finding someone with RCS designation is great advice. I've been burned before by general accountants who missed rental-specific deductions, so having that specialized credential seems like a smart filter when interviewing tax professionals.

Great question about Section 199A! For short-term rentals, the key is whether your rental activity rises to the level of a "trade or business" rather than just investment activity. If you're materially participating (which is easier to achieve with STRs due to the active management required), the rental income can potentially qualify for the 199A deduction. This is especially beneficial for high earners who are otherwise phased out of the deduction. Regarding quarterly payments - I'd suggest making adjustments starting with the next quarter after you implement the strategy. Don't wait until year-end! With OP's income level, underpayment penalties can be steep. Work with your tax pro to model the depreciation and loss projections, then adjust your quarterlies accordingly. You can always true-up later, but getting ahead of it helps with cash flow. The RCS credential really does make a difference. I've seen too many situations where general CPAs miss things like bonus depreciation elections, proper cost segregation opportunities, or fail to optimize the material participation documentation. When you're dealing with this level of income and complexity, the specialized knowledge pays for itself many times over.

Great question about showing losses while being cash-flow positive! This is actually one of the most powerful aspects of rental property taxation. Yes, you can absolutely claim those "paper losses" (created primarily by depreciation) against your W2 income, subject to the passive loss limitations we've discussed. Here's how it works: Let's say your Airbnb brings in $50k in rent but you have $30k in actual expenses plus $25k in depreciation deductions. You'd show a $5k loss on paper for tax purposes, even though you pocketed $20k in cash ($50k - $30k actual expenses). That $5k loss can offset your W2 income if you meet the active participation requirements. Regarding time investment - I spent probably 40-50 hours in my first year just researching and setting up systems (tracking spreadsheets, separate banking, learning the rules, finding the right tax professional). It's definitely front-loaded work, but once you have the systems in place, ongoing maintenance is much more manageable - maybe 2-3 hours per month for record keeping. The learning curve is real, but think of it as an investment that pays dividends for years. With your $400k income, even modest tax savings from this strategy could easily justify the time spent. Just don't try to become an expert overnight - focus on getting the basics right and let a qualified professional handle the complex stuff.