Yes, it is gone, can't spend it. Last question, if it considered property and it's gone, can't I file it as a loss?
Yes you can, because it is a loss. Ooh, that's a new can of worms!
"Help mr IRS, I lost my private key(s)! I'm broke, give me all my tax money and more, please sir!"
Oh, faking it? hahaha, in that case I can say I lost 100,000 btc. Seriously though, 338 is a drop in the bucket compared to the 850k (200k found?). If I can't file it as a loss due to no documentation/proof then so be it, it is what it is. Doesn't hurt to ask though.