Tax implications of crypto gambling losses?

Mike Johnson

Mike Johnson

New member
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
 
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
 
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?
 
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
 
Mike Johnson said:
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
Click to expand...
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
 
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
 
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