I had money invested in Russia during 2022 through the ETF FLRU. At the beginning of the year when the Russia/Ukraine conflict start the government seized a bunch of Russian assets including this ETF. Now the question is what do I do about these assets on my 2022 tax return? Can I declare them as stolen? Just 100% capital loss? Is there some other category I declare this in?
Can I declare them as stolen?
Of course not, it wasn't stolen.
Just 100% capital loss?
No, you haven't yet incurred the loss.
According to the guidance from the Fund manager (Franklin Templenton), the fund will continue to exist through 2023, and is working on divesting its holdings. It was not seized by the government. Once that is done, the fund will distribute what's left to the shareholders. Once that in turn is done, you'll determine whether you have gain or loss, and to what extent.
Franklin Templeton anticipates that FLRU will remain in existence until at least December 31, 2023, to allow FLRU to sell the securities, if conditions permit; FLRU may be terminated sooner if all of the Russian securities have been sold before that date (or they cease to represent valid interests in their issuers). After December 31, 2023, FLRU may be terminated at any time, at the discretion of FLRU’s Board of Trustees, even if not all of the Russian securities have been sold. Due to the uncertainty involved, there can be no assurance that shareholders would receive any liquidating distribution relating to any unsold Russian securities.