NWTM Tax Loss SummaryFirst, to be clear, just as I have no legal background, I do not have a background in taxes or accounting. However, I have researched this topic extensively with other bankruptcies.
In general, the easiest way to deduct the NWTM loss on your tax return is to treat it as a capital loss (almost exactly as you would if you bought an investment and it ended up worthless). If it were me, I would be comfortable taking the loss on my 2020 or 2021 tax return. Determining the precise year would likely require the involvement of the IRS, and it is unlikely (in my opinion) that the IRS would question which year the loss was taken.
Which Tax Year?26 USC § 165 covers this. Normally, the tax year of a loss is easy to determine (e.g. the date you sold it), but in this case it is not clear when the value became $0.
However, 26 CFR § 1.165-1(d)(2)(i) says that if there is a "reasonable prospect of recovery" (which there was, with a bankruptcy claim), the loss could not be sustained until "it can be ascertained with reasonable certainty whether or not such reimbursement will be received." 26 CFR § 1.165-1(d)(3) covers theft specifically, and reiterates that. In other word, the loss should not be taken until you could be reasonably certain that you would not get money.
The tax year where there was first a "reasonable certainty" regarding reimbursement, in my opinion, would be 2021. Looking back, I would also consider 2018-2020 to be reasonable -- but technically you aren't supposed to "look back", making 2021 the most reasonable year to take the loss (in my opinion).
Specifically, the first unofficial report of NWTM shutting down was on December 29, 2017. At that point, NWTM had several million dollars of assets, and Calvert was woefully inadequate in his communications to creditors about the potential of returns to customers, which pretty much rules out 2017. Judge Alston made it pretty clear during 2018 that he was going to reduce fees of the professionals, and did not actually do so until October, 2019 (which had the potential of getting those millions of dollars into the hands of creditrs). Informed creditors thought that there might be a distribution to creditors until around that point. However, it was not until 2021 that I became truly convinced that the professionals would take all the money.
So in my opinion it could be argued that the correct year to take the loss could be anywhere from 2018-2021.
What Amount?I believe that the amount of the loss is either  what you paid NWTM (if you placed an order you did not receive), or  what you originally paid for the metal (if you stored metal with them).
So if you paid NWTM $1,200 for an order, you would take a $1,200 loss (regardless of the price of the metal at any other point in time). If you purchased metal elsewhere for $1,200 and later stored it with NWTM, you would also take a $1,200 loss (even if the metal was worth more/less when you stored it with NWTM).
What if I Already Deducted a Partial Loss?Most people do not need to worry about this. However, if you previously deducted part of your loss, you should now be able to deduct the rest. This would apply, for example, if you lost $1,000 and deducted $800 on a previous return (with the expectation/hope that you would get $200 back). In that case, you could now deduct the remaining $200.
What About a Theft Loss?This is only possible on 2017 and earlier tax returns, based on a change in the tax laws, and would require amending your 2017 return, which I believe it is too late to do. If you are curious, though, check out the page I put together on tax handling for the Bullion Direct bankruptcy.
Further DetailsI have a few other questions answered on my page for the Bullion Direct bankruptcy. Most of it deals with the theft loss (which does not really apply here), but does have further details about some aspects of this type of loss.
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