Node40, a blockchain governance company and one of the biggest server hosting providers for the Dash network, has created a service that allows Americans to properly report their cryptocurrency holdings to the tax authorities.
Node40 Balance, available for Dash today and Bitcoin later this year, calculates net gains and losses for every single transaction made throughout the calendar year, and rolls it all into the relevant IRS form. During two years of development, the software has undergone comprehensive beta testing using real-world use cases, the company reports.
CEO of Node40 Perry Woodin said: “Node40 Balance is a feature packed blockchain accounting service that brings the familiarity of services like QuickBooks or TurboTax to the world of digital currency. Node40 Balance analyzes the blockchain and provides valuation data for all of your transactions. You annotate your transactions according to your real-world needs and Node40 Balance provides reports with your gains, losses, and income. What makes Node40 Balance unique is the precision in which gains and losses are calculated. A simple FIFO strategy is not sufficient for dealing with digital currency transactions. Node40 Balance uses the true carrying cost and days held to calculate precise valuations that ensure you are not over-reporting your tax liability.”
The need for this innovation is the ambiguous IRS policy on cryptocurrency and that when people try to report such transactions themselves they can’t really take minute-by-minute price fluctuations into consideration.
“The burden of calculating tax liability falls completely on the user. Most people do one of two things; use software that does not calculate the level of accuracy that we required, or go to accountants who will apply a very simple FIFO strategy to determine gains or losses, which we know to be incorrect. This strategy works well for traditional investments where you are selling whole units, but it is not a good strategy for digital currency. When transacting in digital currency, most transactions will have multiple inputs, each with a different cost basis. Unless you are able to create an exact transaction, the cost basis of the change needs to be tracked along with the amount of days carried. Users of Dash and Bitcoin, both experiencing meteoric rises this year, have genuinely been crying out for a product like this for a long time. We anticipate significant demand,” Woodin added.