Being a cryptocurrency trader is a complicated hustle. Apart from trading, you have to wear many hats: accounting, statistics, and compliance. Just like the Japanese government, we are presenting some tools to help you consolidate and calculate tax liability for the cryptocurrency traders.
Introduction
仮想通貨 (Virtual currency/Cryptocurrency/Digital currency) needs a lot of understanding from a common man’s perspective as well as a lot of effort to keep oneself compliant with government rules. Cryptocurrencies like Bitcoin, Ethereum and others are traded on various exchanges. Some lets you buy Bitcoin with Fiat currency (JPY) and few will let you buy thousands of other coins using only cryptocurrency (Bitcoin, Ethereum, USDT or others).
In both cases, one needs to keep track of the prices not just in base currency — but also in fiat currency for tax purposes (could be easier in future when we can pay taxes in Bitcoin).
Consolidation of trades and calculating gain-loss has been a nightmare and doing it right is harder.
To solve the cumbersome tracking process of prices, there are certain tools available on the internet and one of them that supports Japanese tax year (1st April to 31st March) and native currency (Japanese Yen) is BearTax.
With a huge happy customer base, BearTax is a well-known name in the game to calculate the capital gain-loss. As part of our mission, the support for Japanese customers has been rolled out.
BearTax - Cryptocurrency Tax Software for Japan_Simple & trusted platform for crypto traders, accounting professionals, CPAs to connect exchanges, import transactions…_bear.tax
Step by Step guide for Calculating Cryptocurrency Taxes
Signup & Activate account
Use MEDIUM10 and save 10% (offer valid until end of November) Signup with BearTax and select your country as “Japan” — This will set your fiscal year to 1st April — 31st March and the native currency as JPY.
Once you are registered and activate yourself using the link received in email, you are good to log in to the platform. This should bring you to the “Get Started” screen.
Upload or Import your transactions
BearTax is integrated with more than 25 majorly used exchanges across the world. This includes the famous ones like Huobi, OkEx, Binance, Bitfinex, Coinbase and more., You can integrate via an API or CSV/Excel file provided by the exchanges.
Smart matching
We all know how crazy it gets when you move assets across the platform. Not all coins are available on a single exchange, which makes traders to register on multiple exchanges. Since moving your digital assets across the exchanges is not a taxable event, we need to ignore them.
BearTax has got smart algorithms running in the background to match your withdrawals and deposits across exchanges. This avoids a lot of manual work of manually ignoring them. This also avoids you to have “force sell” — which means few tools which work only with one exchange might consider all the withdrawals or transfers out of exchange as a sale, which results in wrong gain-loss information.
Review for missing sources
Once your transactions are imported, there could be few deposits in them which were done from unsupported exchanges, there could be gifts sent to you by someone.
So, the possibilities of additional assets without BUY transaction and deposits for which withdrawals couldn’t be matched are always there. So, we give you an option to review such deposits and assets. Your selection will help the platform decide on right cost-basis(purchase price) for each asset.
Review for forks/referral bonuses/airdrops
As you all know, there are lots of free coins that rain sometimes. These could be a result of
- A Hard Fork — where the asset you hold forks into a new coin leaving you with 2 different assets with different value.
- An Airdrop — where an asset could be deposited to your account for holding some other asset or just registering to some project
- Referral Bonus — Generally deposited to your account when you refer someone and this generally don’t have a trade record.
- Competitions — Some exchanges organize trading competitions and reward users with certain amount of currency. This also doesn’t have a trade entry.
So, all such assets, if you sell at some point in a given tax year — platform will see them as assets that have a SELL transaction but No BUY transactions. These will also be shown for your review whether to take $0 cost-basis or price of asset on the day of deposit by case by case scenario.
Let the system do some magic
This is the next step and just one step away from viewing your gain-loss information. Once the review of unknown deposits and surprise assets on your trade list is done — Tax Run will be kicked off and this is where our system starts to put it’s magic to work.
Platform will now match your buys and sells where it considers all your “sells” in current tax year and buys from all the years before that transaction, matches them by First In First Out (FIFO) and determines whether it’s a Long term gain or a short term gain.
When the matching, processing and calculation is done, your gain-loss, number of transactions will be updated on your dashboard.
Your gain-loss is ready to view
That was the final step. Beauty of this software is, it would have taken less time to calculate your gain-loss than actually reading this :)
Gain-Loss for each asset is shown as a summary as well as it’s details. Details contain the asset, quantity, acquired date (purchased date), cost-basis (purchase price), sold date, total proceeds (sold price), gain/loss type — which would be either short term or long term and net gain-loss amount.
Preview the summary and go ahead to download tax documents.
Once the gain-loss is calculated, you can download the tax documents. i.e. the capital gain-loss CSV which will list all your trades along with gain loss information mentioned above can be downloaded. This information can either be passed on to your accountant or you can enter the same in corresponding document that has to be attached with tax filing.
Calculating taxes on cryptocurrency is scary! Filing them right is hard. We are here to help you get this done in an easy and user friendly way.
BearTax - Easy to use Cryptocurrency Tax Software_Simple & trusted platform for crypto traders, accounting professionals, CPAs to connect exchanges, import transactions…_www.bear.tax
Signup on BearTax now and calculate your tax liability for free and Save tons of hours of effort!
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