As of yet, it is not clear how to report the loss. FTX has filed for Chapter 112 bankruptcy protection, which means that holdings may still have some value. The IRS may clarify whether those who put money into FTX are victims of a Ponzi scheme and would be eligible for immediate tax write-offs. Stay tuned…we’ll provide guidance as soon as this matter is clarified.
A business loss that exceeds current income may be carried back against income of prior years and carried forward as a deduction from future income until eliminated.