Crypto Tax Report Slang for US Tax Payers in 2020

Tax Method:

FIFO:

First In, First Out, commonly known as FIFO, is an asset-management and valuation method in which assets produced or acquired first are sold, used, or disposed of first. For tax purposes, FIFO assumes that assets with the oldest costs are included in the income. The remaining inventory assets are matched to the assets that are most recently purchased or produced. See a sample report here.

Source: https://www.investopedia.com/terms/f/fifo.asp

LIFO:

Last In, First Out (LIFO), the inventory valuation method opposite to FIFO, where the last item purchased or acquired is the first item out. In inflationary economies, this results in deflated net income costs and lower ending balances in inventory than FIFO.

Source: https://www.investopedia.com/terms/l/lifo.asp

Multiple Tax Lot Accounting (Multiple Depot):

Tax lot accounting is the record of tax lots. It records the cost, purchase date, sale price, and sale date for each security held in a portfolio. This recordkeeping method allows an investor to track each stock sale throughout the year so that s/he can make strategic decisions about which lot to sell and when bearing in mind that the type of investment tax to be paid will depend on how long the stock was held for.

Source: https://www.investopedia.com/terms/t/taxlotaccounting.asp

Key metrics:

Initial yearly portfolio value:

The monetary value of the cryptocurrency portfolio based on the beginning of the previous tax year

End of the year portfolio value:

The economic value of the cryptocurrency portfolio based on the end of the previous tax year

Number of transactions for the year:

Amount of trades, transactions, fees, and others completed during that tax year

Fields available in report:

Gains/Losses with a holding period of less than one year:

These are positive or negative disposals of crypto assets that generated a gain or a loss during a short-term period or held in an exchange or wallet for less than one year.

Gains/Losses with a holding period of less than one year:

These are any positive or negative disposal of a crypto asset that generated a gain or a loss during a long-term period or held in an exchange or wallet for more than one year.

Other income:

Any income in cryptocurrency generated out of other available transaction classification like:

  • bounties
  • airdrops
  • mining
  • staking

Total gains:

The total amount of disposals that generated a profit, whether capital gains or income.

Losses and fees from margin trades:

The total amount of disposals generated a negative value based on trades and transactions, and the brokers’ margin fee costs from margin trading.

Transaction fees:

Fees paid to exchanges, wallets, or miners in the different platforms to perform a transaction

Disposals of standard orders and transfers:

Accrual all of the different transactions classified as orders or transfers aligned to a specific buy/sell date, source, type, and cost basis.

List of airdrops and hard forks with date:

All airdrops and hard-forks combined in one list with each and the cost basis’s specific acquisition date.

Disposals of air dropped and hard forked coins:

All airdrops and hard-forked coins sold or transferred, including its source (depot), cost basis, trade date, fees, and proceeds.

Staking, mining, masternode, and bounty income:

All staking, mining, masternode, and bounty income combined in one list with the specific acquisition date of each and their cost basis

Disposals of coins earned from mining or staking:

All tokens staked, mined, put into a master node or received via bounty sold and generated a gain or loss with its source (depot), cost basis, trade date, fees, and proceeds.

Margin PNL:

Overall profit and loss of the entire margin trading history of a user during that tax year including buy/sell date, type, cost basis, proceeds, source (depot), classification, and others.

Disposals of coins from margin gain/loss trades:

Disposal of tokens in margin trading activities that generated a gain or a loss with its corresponding buy/sell date, type, cost basis, proceeds, source (depot), classification, and others

Disclaimer:

The US crypto tax report disclaimer establishes the following:

  • Assumptions
  • Calculations
  • Sources of information
  • Variability for calculations

Use cases:

Tax filing:

All profits generated during activities related to cryptocurrency are taxable with very few exceptions. For more information, go here.

AML report:

Some banks will require a recount of every single transaction due to Anti-Money Laundering laws in the US.

Tax partner:

Clinton Donelly a.k.a The Crypto Tax Fixer. For more information, go here.


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