A forced close is still a disposition
When account equity falls below maintenance margin, the venue force-closes the position — the liquidation engine or the backstop liquidity pool takes it over at the forced price. For tax purposes the involuntary nature changes nothing: it is a disposition at a price, and the difference against your entry is a realized capital loss (occasionally a gain, on a partial liquidation).
Everything the liquidation 'charged' you is inside that realized number — the forced-execution price, the haircut versus mark, the loss of remaining margin on the position. There is no separate deductible 'liquidation fee' to hunt for: the venue doesn't itemize one, and the realized PnL on the closing fills is the whole economic result.
What does matter for the record is that liquidation losses are ordinary capital losses: they offset capital gains, then up to $3,000 of ordinary income per year, with the rest carrying forward. A liquidation-heavy year can carry a real deduction — but only if the realized figure is actually in your data.
Where the record lives — and the double-count trap
On Hyperliquid, a liquidation's forced-close executions appear in the fills stream as ordinary fills — the realized loss is already inside the fills sum. Separately, the non-funding ledger records a `liquidation` delta: a state row listing liquidated notional, account value at liquidation, and the positions taken. It describes an event that already happened; it does not move additional value.
That distinction matters because tooling that reads both streams can book the loss twice — once from the fills (correct) and once as an extra 'liquidation outflow' from the ledger row (wrong). The correct treatment is exactly one count: the fills.
The mirror-image trap is the 30-hour retention window: an importer reading only the venue's fill endpoint won't see the liquidation at all if it happened more than a day ago — the loss simply vanishes from the record, and with it the deduction.
The honest edge cases
Partial liquidations close part of a position — each forced execution is its own fill with its own closed PnL, and only the closed part is realized. The remainder stays open with its basis intact.
An account fully liquidated to zero still needs its record: the realized losses through the forced fills are deductible in the normal way, and 'I lost it all on the venue' is not a filing position on its own. Whether the character of perp gains and losses on a non-US venue follows your preferred treatment is a question for your preparer — the realized numbers themselves are not in dispute.
Basisproof recomputes liquidation losses the same way it computes every close — fill by fill, from the full indexer's stream rather than the 30-hour window. The ledger's liquidation rows are classified as informational records, not flows, so the loss is never double-counted and never absent.
Common questions
?Is a liquidation on Hyperliquid taxable?
Yes — a forced close is a disposition like any other close. The realized loss (or occasional gain on partial liquidations) is a capital gain or loss in the normal way.
?Can I deduct what the liquidation took from me?
The deductible amount is the realized loss on the closing fills — execution price against your entry, which already includes the forced-price haircut. There is no separate liquidator fee line; the realized number is the whole loss.
?Do liquidations show up in my trade history?
Yes — forced-close executions appear in the fills stream, and the ledger adds a descriptive `liquidation` row. Tools that read both can double-count the loss; tools reading only the last 30 hours of fills can miss it entirely.
?My whole account was liquidated — do I still need records?
Yes. The realized losses through the forced fills are your deduction, and the fills are also your evidence that the position existed and was closed — 'the account went to zero' alone doesn't document either.
Every close counted once
The paid report recomputes realized PnL over the full fill history — liquidation executions included exactly once, ledger records disclosed as records.