In the previous article, we mentioned that the anonymity and decentralization of crypto assets are a source of concern for tax authorities, but in fact, tax investigators in the field are also troubled by the difficulty of calculating profits and losses from crypto assets.
Income tax on crypto asset transactions is calculated by first calculating the profit and loss from crypto assets, and then calculating the appropriate tax amount based on this in accordance with the rules of the Income Tax Act. However, accurate profit and loss calculations are difficult in cases where transactions are made using overseas exchanges, DEXs (decentralized exchanges), or private wallets.
The steps for calculating profit and loss using crypto asset profit and loss calculation software are as shown in the figure. When calculating profit and loss, various problems can be encountered at each of these stages ① to ④.