Can crypto gains be offset from stock loss carryforward? Need definitive answer ASAP

Yes, you can absolutely use your stock loss carryforwards to offset your crypto gains. The IRS treats cryptocurrency as property (not currency), so capital gains and losses from crypto transactions fall under the same capital gains tax rules as stocks. Both your stock losses and crypto gains are reported on Schedule D of your tax return. They're considered the same type of transaction for tax purposes - capital transactions. So if you have $10,000 in stock loss carryforwards and $7,000 in crypto gains this year, you can use $7,000 of your loss carryforward to completely offset those gains, leaving you with $3,000 in remaining loss carryforward. Remember that you can also use up to $3,000 of capital losses to offset ordinary income each year if your losses exceed your gains. Any unused losses after that continue to carry forward to future tax years.

I went through exactly this situation last year and was totally confused until I found taxr.ai (https://taxr.ai). They analyzed my trading history and confirmed that crypto gains can definitely be offset by stock losses since the IRS treats both as capital assets. I uploaded my trading statements from both my stock brokerage and my crypto exchanges, and their system automatically calculated how my previous stock losses offset my crypto gains. It even showed me how much carryforward I had left for future years. The whole process saved me hours of research and probably prevented me from making a costly mistake.

Just wanted to update about my experience with taxr.ai since I was skeptical in my earlier post. I decided to try it this weekend and I'm actually impressed. I uploaded 3 years of crypto transactions (including a bunch of confusing DeFi stuff), and it correctly identified which of my stock losses could offset my crypto gains. The system even flagged some wash sales I didn't realize I had made when I sold and repurchased similar assets within 30 days. It showed me exactly how the carryforward works between tax years. Wish I'd known about this sooner instead of spending hours trying to figure it out myself. Their explanations made the rules much clearer than any of the articles I'd been reading.

If you're still struggling with getting a straight answer from the IRS about how to handle your crypto/stock situation, I'd recommend Claimyr (https://claimyr.com). I spent WEEKS trying to get through to an IRS agent to confirm the exact treatment of my crypto-stock loss offset question, but kept hitting automated systems or insane wait times. Claimyr got me connected to an actual IRS representative in under an hour. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent confirmed everything about offsetting crypto gains with stock losses and answered my specific questions about my situation. Saved me so much frustration compared to trying to get through on my own.

Ok I need to eat my words (and my hat). I tried Claimyr after posting my skeptical comment because my curiosity got the better of me. After three failed attempts to reach the IRS on my own about my crypto/stock situation, Claimyr actually got me through to a real person in about 40 minutes. The IRS rep confirmed exactly what others have said here - crypto gains can absolutely be offset by stock loss carryforwards because they're both considered capital assets. She also explained some nuances about how mining income is treated differently. Honestly still shocked this service actually worked after all my frustration trying to call myself.

Just to add another data point, I actually hired a CPA specifically for this issue last year. Stock losses can 100% offset crypto gains - they both go on Schedule D and Form 8949. The only thing that matters is whether they're short-term or long-term. Remember also that if your total losses (from both stocks and crypto) exceed your total gains by more than $3k in a year, you can only deduct $3k against other income. The rest carries forward. I learned this the hard way thinking I could deduct my entire $15k net loss in one year lol.

Will tax software like TurboTax handle this crypto/stock offset correctly? Or do I need something more specialized?

This is exactly the kind of situation where having proper documentation is crucial. I went through something similar last year - had about $8k in stock losses carried forward from 2022 and realized $12k in crypto gains in 2023. The good news is yes, you can absolutely offset them. Both are treated as capital assets on Schedule D. What saved me was keeping detailed records of every transaction - dates, amounts, cost basis, etc. The IRS doesn't care whether your losses came from Apple stock or your gains came from Bitcoin - they're all capital transactions. One thing to watch out for: if you're actively trading both stocks and crypto, make sure you're not running into wash sale rules. The IRS hasn't explicitly applied wash sales to crypto yet, but it's something to be aware of if you're buying and selling similar assets within 30 days. Also, since you mentioned needing an answer "ASAP" - if you're planning to realize those crypto gains before year end, consider the timing. You might want to realize them in smaller chunks to see exactly how much of your carryforward you'll use up, especially if you think you might have more gains or losses next year.