That's one of the most intriguing questions I've ever seen on iHub. I would think that the loss is only "recognized" for tax purposes when it's at 0, but in order for it to be "realized" (again, for tax purposes), you would actually have to hit the sell button.
This makes sense if you flip the question around (i.e., when would I "realize" a gain for tax purposes? Obviously, when you sell.
Take care.