The Token Expert Method

1. Tools Selection and Data Import

We start by importing the transactions associated with your addresses across the different blockchains and the centralized exchanges that you’ve used. We use several data sources to ensure we start with a complete and accurate transaction history.

2. Identification of Transactions

We review your transactions in context and classify them according to their nature. Swaps, transfers, staking activity, liquidity positions, and interactions with decentralized applications are identified and categorized to support an accurate reconciliation of their financial impacts.

3. Client Collaboration

For transactions that cannot be confidently classified, we reach out to confirm the details with you. This step ensures the accuracy and completeness of your transaction history.

4. Context-Based Financial Impact Calculation

We apply our proprietary methodology to analyze each transaction according to its source, nature, and context, then determine the resulting financial impact. The results are consolidated into a structured master table for further accounting and reporting.

5. Data Validation

Our team reviews all transactions to ensure consistency across asset movements and identify any anomalies. We also verify the quantities of assets held in wallets and on platforms to ensure that the calculated balances match the assets actually held.

6. Calculation of Gains and Losses

Once all transactions have been validated, we calculate gains and losses by transaction type using the cost-basis methodology applicable in your tax jurisdiction.

7. Cost Basis Reconciliation

We reconstruct the year-end cost basis of your assets using their opening cost basis and the cumulative impact of all transactions completed during the year. The reconstructed amount is then compared with the recorded closing cost basis for each asset. Any discrepancies are investigated to identify their source and confirm the accuracy and completeness of your records.

8. Annual Summary Preparation

We prepare a comprehensive annual summary of the income, expenses, gains, and losses arising from your digital asset activity. This report provides your accountant with a clear and organized foundation for preparing your tax returns.

9. Journal Entry Preparation for Businesses

For corporate clients, we prepare journal entries that accurately reflect digital asset activity in their accounting records. Entries can be prepared monthly, quarterly, or annually, depending on their reporting needs.

10. Canadian Tax Form Preparation (Upon Request)

For our Canadian clients, we can prepare the federal and provincial tax forms required to report digital asset activity. Our supporting reports clearly organize the relevant income, expenses, gains, and losses to facilitate accurate tax filing.