You aren't covering losses, you're failing to tax gains that didn't materialize. If I fail to get a job, you don't tax me for the income from a job I might have had. This is true even if my reason for not getting the job is really stupid.

This isnt right because capital losses count against capital gains. So, taking a loss allows you to not pay taxes on an equal amount of gains that you would've been taxed on otherwise.

Overall you gained nothing though.

If I give you a million dollar and then steal it back a day later, I feel like you should not pay taxes on it.

Same thing if I give you a million dollar, you buy expensive X thing but the seller goes bankrupt and never delivers anything.

> If I fail to get a job, you don't tax me for the income from a job I might have had.

Yet.

Everyone here is confused.

You only ever got to write off you cost basis but you cannot if the cost is stolen.

Well, for one, the thieves have to claim it as income.

For two, I made no judgment, just stated facts.

It’s not a loss if it was never realized; if he never converted coins to fiat at a loss from the purchase, there is no loss except on paper (and that is not tax deductible).

>It’s not a loss if it was never realized

If I hold stock in a company that goes bankrupt, I can write-off those losses, even though they never get converted to fiat.

Doesn’t this support the opposite?

Ever dollar I pay anyone for services must be claimed as income, yet none of those are capital losses for me. Conversely, none of my capital losses can be claimed as anyone’s income.

>I pay anyone for services

What service exactly am I getting for being robbed?

Conversely, in the correct metaphor, if I buy a fraudulently priced stock for $100 and sell for $0.01, I get to write off the $99.99.

Seems kind of arbitrary that 'a buyer' is the difference between a write-off and not.