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Solana-hacked crypto could be claimed as a tax loss: Experts

For unlucky crypto investors looking to turn lemons into lemonade — it turns out that digital assets lost during an exploit or hack can potentially be claimed as a tax loss, provided you live in the right country, experts told Cointelegraph. 

Following the news that more than 8,000 Solana wallets had been compromised and that an estimated $8 million dollars in crypto had been stolen due to a security breach in Web3 wallet provider Slope’s network, this may be some much-needed consolation.

The Solana hack, and it’s possible tax consequences: A thread https://t.co/JnYMrkB8qJ

— Crypto Tax Calculator (@CryptoTaxHQ) August 3, 2022

In correspondence with Cointelegraph, Shane Brunette, the CEO of Australia-based CryptoTaxCalculator confirmed that crypto lost via a hack or an exploit couldd be declared as a loss for tax purposes in certain jurisdictions. 

“This means the original amount you paid for the asset(s) can be used to offset other capital gains.”

When asked whether there are similar provisions in other tax jurisdictions other than Australia, the country in which the tax software provider is based, Brunette, replied:

“Many countries have a provision to allow for these types of tax deductions […] however, you should work closely with a local tax professional and make sure you keep adequate proof of the loss.”

Danny Talwar, Head of Tax at Koinly confirmed the same with Cointelegraph, stressing however that in Australia, one must demonstrate evidence that the crypto lost was under their control at the time it was stolen.

“To claim a capital loss for hacked crypto, you’ll need to demonstrate evidence to the Australian Tax Office (ATO) that the crypto is lost and it was under your control.”

Talwar also stated it was critical that the tax authority has enough evidence that crypto is unretrievable, suggesting the use of blockchain explorer tools like Etherscan and Solscan to legitimate evidence on the destination address of the hacker — which may also provide proof of a large pool of hacked funds.

Under Australian tax laws, any evidence of a hack…

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