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In both Canada and the United States, how do we write off the loss due to bankruptcy of the financial institution in excess of deposit insurance on the tax return for the tax year when the bankruptcy occurred?

Is it a capital loss? Or is it some other kind of loss?

  • "Some internet users suggest" lots of stupid things they pull out of their arses. Why should we trust them? – RonJohn Aug 24 '19 at 20:23
  • I wouldn't put all of my eggs in one basket but Massachusetts banks are insured by the Depositors Insurance Fund and there's no $250k limit. It's available to non residents. I don't know if there are any hidden risks. It's an assumption that banks will fail on a scale worse than 2008 if the market craters more than it did in 2008. The cause of that bear market was financial (subprime lending, CDOs, etc.). If the cause isn't financial (like the -50% Internet Bubble), banks will be fine. – Bob Baerker Aug 24 '19 at 21:13
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    Much of the question tries to motivate why someone might hold large amounts of cash, but this isn't essential to the question. Just the last paragraph is enough. – nanoman Aug 25 '19 at 8:33
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    FDIC has been covering all deposits at failed banks lately. – nanoman Aug 25 '19 at 8:37
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    To the close voter: This is a question about income tax for an individual and is on-topic. – Ben Miller - Reinstate Monica Aug 25 '19 at 16:20

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