Tax implications of crypto gambling losses?

[Mike Johnson]

Kind of complicated tax situation. Bought 1.2 BTC in 2021 at $35k average. Used 0.8 BTC for gambling on various sites in 2024, lost it all. Original 0.8 BTC cost basis was about $28k. Now for taxes, can I:

1. Claim $28k gambling loss against other income?
2. Claim crypto capital loss?
3. Both?
4. Neither?

US-based. Getting conflicting advice online

 

[W4LL3T_BR34K3R]

in US gambling losses only deductible against gambling wins, not regular income. and only if you itemize deductions. crypto conversion to gambling chips probably taxable event too

 

[Mike Johnson]

So if I understand right:

• Convert BTC to gambling = taxable event (capital gain/loss)
• Gambling losses = only deductible against gambling wins

So I'd potentially have TWO tax impacts?

 

[W4LL3T_BR34K3R]

correct. when you transferred btc to gambling site, that's disposal of crypto = capital gain/loss. then gambling losses only offset gambling winnings. double whammy unfortunately

 

[CryPtoP4ws]

This is why gambling with crypto is tax nightmare. Each bet technically taxable event + gambling loss limitations. I use separate wallet for gambling and treat deposits as "cost of entertainment" not trying to claim losses

 

[bitcornholder]

Kind of complicated tax situation. Bought 1.2 BTC in 2021 at $35k average. Used 0.8 BTC for gambling on various sites in 2024, lost it all. Original 0.8 BTC cost basis was about $28k. Now for taxes, can I:

1. Claim $28k gambling loss against other income?
2. Claim crypto capital loss?
3. Both?
4. Neither?

US-based. Getting conflicting advice online

talk to actual tax pro. crypto gambling tax rules still evolving and even IRS not 100% clear on all cases. might depend on exact games played and how site structures tokens

 

[Mike Johnson]

Thanks everyone, sounds like I need professional tax help for this situation. I guess It'd be better to research tax implications before gambling with crypto lol