PRD: Crypto Tax Calculator

PRD: Crypto Tax Calculator

Summary

One-liner: Calculate cryptocurrency tax obligations with cost basis tracking, capital gains computation, and jurisdiction-aware reporting.

Domain: Cryptocurrency / Tax Compliance Users: Individual Traders, Tax Professionals, Accountants

Problem Statement

Cryptocurrency tax compliance is complex due to:

• Multiple taxable event types (trades, staking, airdrops, DeFi yields)
• Various cost basis methods (FIFO, LIFO, HIFO, specific ID)
• Short-term vs long-term capital gains distinctions
• Transaction data scattered across multiple exchanges/wallets
• Jurisdiction-specific rules varying by country

Users need a tool that parses transaction history, calculates cost basis accurately, identifies taxable events, and generates tax-ready reports.

User Personas

Persona 1: Individual Trader (Alex)

• Profile: Active crypto trader with 100+ transactions/year across 3-5 exchanges
• Pain Points: Manual tracking is error-prone, multiple exchange exports, uncertain about DeFi taxation
• Goals: Accurate tax calculations, minimize tax liability legally, generate Form 8949

Persona 2: Tax Professional (Morgan)

• Profile: CPA with multiple crypto clients
• Pain Points: Each client uses different exchanges/wallets, needs audit-ready documentation
• Goals: Batch processing, clear audit trail, jurisdiction flexibility

Persona 3: DeFi User (Jordan)

• Profile: Yield farmer with staking, liquidity provision, token swaps
• Pain Points: Complex DeFi transactions, unclear tax treatment, multiple protocols
• Goals: Accurate categorization of DeFi events, cost basis for LP tokens

User Stories

US-1: Import Transaction History (Critical)

As a trader I want to import my transaction history from exchange CSV exports So that I can calculate taxes without manual entry

Acceptance Criteria:

• Supports Coinbase, Binance, Kraken CSV formats
• Handles generic CSV with configurable column mapping
• Validates required fields (date, type, asset, quantity, price)
• Reports import errors with line numbers

US-2: Calculate Cost Basis (Critical)

As a trader I want to calculate cost basis using my preferred method So that I can optimize my tax liability legally

Acceptance Criteria:

• Supports FIFO, LIFO, HIFO, specific identification
• Tracks lot-level cost basis
• Handles partial disposals correctly
• Shows comparison across methods

US-3: Generate Tax Report (Critical)

As a trader I want to generate a tax report in Form 8949 format So that I can file my taxes or give to my accountant

Acceptance Criteria:

• Separates short-term and long-term gains
• Calculates total gains/losses per category
• Outputs CSV compatible with tax software
• Includes summary totals

US-4: Identify Taxable Events (High)

As a DeFi user I want to identify all taxable events including staking rewards So that I don't miss reportable income

Acceptance Criteria:

• Flags trades, swaps, sells as disposals
• Identifies staking/yield as income at fair market value
• Detects airdrops as income
• Marks transfers (non-taxable) separately

US-5: Multi-Year Analysis (Medium)

As a tax professional I want to analyze multiple tax years So that I can handle amended returns or multi-year audits

Acceptance Criteria:

• Filter transactions by tax year
• Carry forward cost basis across years
• Generate year-over-year comparison
• Track wash sale implications

Functional Requirements

REQ-1: Transaction Import

• Parse CSV exports from major exchanges (Coinbase, Binance, Kraken, Gemini)
• Support generic CSV with column mapping configuration
• Handle transaction types: buy, sell, trade, transfer, deposit, withdrawal, staking, airdrop
• Validate and normalize data (timestamps, symbols, quantities)

REQ-2: Cost Basis Calculation

• Implement FIFO (First In First Out) - IRS default
• Implement LIFO (Last In First Out)
• Implement HIFO (Highest In First Out) - minimize gains
• Implement Specific Identification (manual lot selection)
• Track acquisition date and cost per lot
• Handle fees (add to cost basis on buy, reduce proceeds on sell)

REQ-3: Gains/Losses Calculation

• Calculate realized gains/losses per disposal
• Determine holding period (< 1 year = short-term, >= 1 year = long-term)
• Apply wash sale rules where applicable
• Sum by category (short-term gains, short-term losses, long-term gains, long-term losses)

REQ-4: Income Recognition

• Fair market value lookup for staking rewards at receipt time
• Airdrop valuation at receipt time
• Mining/yield income categorization
• DeFi reward tracking

REQ-5: Report Generation

• Form 8949 format (Date Acquired, Date Sold, Proceeds, Cost Basis, Gain/Loss)
• Summary by category
• Export to CSV for tax software import
• JSON output for programmatic use

API Integrations

• CoinGecko Historical API: Historical prices for cost basis and FMV
• Local CSV Import: Exchange export files (no API needed)

Non-Goals

• Real-time portfolio tracking (see crypto-portfolio-tracker)
• Exchange API integration for automatic import (privacy/security)
• Tax filing submission (generates reports for manual/software filing)
• Legal tax advice (informational tool only)

Success Metrics

• Skill activates on tax-related trigger phrases
• Imports common exchange CSV formats without errors
• Calculates gains/losses matching manual verification
• Generates valid Form 8949 format output

Technical Constraints

• Python 3.8+ with standard library (csv, json, datetime)
• Optional: requests for historical price lookups
• No exchange API credentials stored
• Works offline for basic calculations

Risk Assessment

Examples

Example 1: Basic Tax Report

python tax_calculator.py --transactions trades.csv --method fifo --year 2025 --output tax_report.csv

Example 2: Cost Basis Comparison

python tax_calculator.py --transactions trades.csv --compare-methods

Example 3: DeFi Income Report

python tax_calculator.py --transactions all_transactions.csv --income-report

Version History