NODE40 Balance aggregates transactions from different sources, calculates cost basis for processing, and produces reports and tax forms ready for filing or importing into software such as TurboTax®, H&R Block®, and Drake Software®. 

A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z

A

Audit Trail

A record of activity that can be verified using specific identification against a blockchain including consistent and reasonable data and valuations.

B

C

Cost basis

The fiat (e.g. USD) value of a specific quantity of digital currency at the time it was received. Cost basis is used to calculate the gain or loss of a disposition event (i.e., a trade or sale).

Carried basis

Cost basis of the amount of digital currency not used in the gain calculation. The value of the currency not being used and still held.  The basis that is staying behind in the wallet from the inputs.

Custodial wallet

A wallet owned and controlled by a customer, as apposed to a wallet on an exchange. Examples include hardware wallets like a Ledger or Trezor and software wallets like a Bitcoin Core Wallet.

D

 

Days held

The number of days a piece of digital currency was owned by you before disposing of it through a trade or sale.

Digital currency

A form of currency that is available only in digital or electronic form, and not in physical form. Examples of digital currencies are: Bitcoin (BTC), Dash (DASH), and Ethereum (ETH)

Disposition

A transaction that results in a trade for another digital currency, or sale for fiat.

E

Exchange

Third-party platform used to exchange tokens for fiat or other tokens. Ledgers produced from exchange-based data default to an account-based ledger. 

Exempt

Exempt is a term that can be applied to income or tax liability. 

Only “receive” transactions can be income exempt. A transaction that is income exempt will not be counted as income in summary calculations. Income exempt has no bearing on gain calculations.

Only “send” transactions can be tax exempt. A transaction that is tax exempt will have the gain overridden to zero, effectively nullifying any tax liability associated with the gain of the transaction.

Expense

A quantity of digital currency that is used to cover a cost.

F 

Fee amount

The quantity of digital currency associated with a fee. This could be a miner fee for an on-blockchain transaction or a fee charged for transacting on an exchange.

Fee value 

The fiat value associated with a fee. This value could be calculated from a specific quantity of digital currency, or be a flat fiat fee as seen in some exchanges.

Fiat

Fiat currency is currency that a government has declared to be legal tender. For example, USD.

G 

Gain

A gain is always a calculated fiat value. It is the result of subtracting “cost basis” from “realized value”.

H

I

Income

Digital currency that is "received" and may be considered taxable. Examples include mined digital currency, or digital currency received in exchange for goods or services.

Input

A single piece of digital currency previously received by a wallet (may include change) and is subsequently used as part of a transaction to send or transfer digital currency. An Input has a unique cost basis.

Inputs

The Unspent Transaction Outputs (UTXO) that make up a transaction.

J

K

L

Ledger

A collection of send and receive transactions that are used to calculate common accounting values such as income and gains. Ledgers can be constructed for any logical grouping of transactions regardless of the source (i.e. wallet vs. exchange)

Long-term Gain

A gain resulting from a transaction involving digital currency held for more than one year.

Loss

A loss is always a calculated fiat value. It is the result of subtracting “cost basis” from “realized value”. Also can be thought of as a negative gain.

M

Multisignature (multi-sig) Wallet

Multi-signature. A wallet configuration that requires at least two keys to authorize a transaction.

N

O

Off-blockchain accounting

Transactions that take place on a third party's proprietary set of books and therefore unable to be independently verified. Such transactions very rarely involve a blockchain. Cost basis is provided through downloads from the third party or through API access. See also, Order based accounting.

On-blockchain accounting

Transactions that are recorded to a blockchain. The life cycle of the involved digital currency can be audited and may not be altered. Customers custodial wallet are processed using on-blockchain accounting. 

Order-based accounting

A method of accounting which relies on processing transactions in a predefined and consistent order to generate ledgers. Examples include FIFO and LIFO.

Output

A destination of an outgoing transaction. A single transaction may contain multiple output destinations.

P 

Q

R

Realized value

The fiat value of a quantity of digital currency at the time it is disposed of.

Receive 

A transaction that increments the quantity of digital currency in a ledger.

S

Send

A transaction that decrements the quantity of digital currency in a ledger.

Short-term gain

A gain resulting from a transaction involving digital currency held for less than one year.

S.M.A.R.T.

NODE40's Simple Multi-Account Reconciliation Technology (S.M.A.R.T.) tracks cost basis as digital currency moves from wallet to wallet including exchanges all under the control of the customer.

Specific identification accounting

A method of accounting which relies on blockchain information to specifically identify and correlate all transaction activity for a wallet to generate ledgers. This methodology is the most accurate.

Subtotal amount

The quantity of digital currency for a transaction less any “fee quantity”

Subtotal value

The fiat value of a transaction less any “fee value”

T

Taxable Event

A transaction that results in income to the taxpayer or a gain/loss from a disposition. Transfer (within wallets or exchange) are not considered or treated as taxable events.

Total amount

The total quantity of digital currency for a transaction. It is the sum of “fee quantity” and “subtotal quantity”

Total value

The total fiat value of a transaction. It is the sum of “fee value” and “subtotal value”

U

UTXO

Unspent Transaction Output.

Unit value

The fiat value of a single unit of digital currency at a specific point in time.

V

Valuation

See Unit Value.

W

Worksheet

An itemized record disposition transactions. Modeled after the IRS form 8949, It is typically in tabular format and shows the individual cost basis and gain calculations for all parts of an aggregate gain calculation. There is a worksheet view in the Balance UI as well as an Excel version that is generated as supplemental data for the 8949 form. Supports the audit trail.

X

Y

Z