CryptFolio provides a FIFO report to help you complete end-of-year tax returns for countries and situations where you are treating cryptocurrency as inventory. The FIFO report for a particular currency can be accessed through your Inventory reports, and is broken up into three sections.

For a tutorial on how you can use FIFO reporting to calculate your end-of-year cryptocurrency NZ tax reports, check out our Medium article.

Accessing your FIFO report

You access your inventory report through your inventory report for a given currency.

1. Visit the portfolio that you wish to view the inventory for, and click on the Balances link in the top right of your portfolio.

2. Select the Inventory link for the currency you wish to view.

3. Click on the FIFO report button in your inventory report.

Outstanding Purchases (Inventory)

Outstanding Purchases (Inventory) describes all of the currency you have ever purchased (i.e. categorised as a Purchase, Mining, or Airdrop transaction), the price (and value) at purchase, and how much of it has been sold (and thus its remaining value). Each inventory item has a unique ID (e.g. “#3”).

Completed Sales

Completed Sales shows all of the taxable events (i.e. transactions categorised as a Sale transaction) for this currency.

For each transaction, CryptFolio calculates the value of the transaction, using a composite rate on that date. The initial price (and value) of the inventory sold is also listed (calculated with FIFO, e.g. “#3”).

With all of this information, the realised gain can then be calculated for each transaction, based on the value of the currency at the time that you purchased that currency.

The highlighted value is the total realised gain for all of your transactions in the listed time period – which can then be used in tax returns.

Unrealised Gains (Inventory)

Finally, Unrealised Gains (Inventory) shows you all of the currency you have ever purchased that has not been completely sold, and along with the current value of each currency, you can see your unrealised gains  – i.e. how much gain (or loss) you could realise if you were to sell all of your currency (inventory) at the time of report.

Exporting reports

Once you have completed your reports, you're able to download them in CSV format or PDF format – suitable for importing into third-party software (such as Xero), and these reports can be stored as part of your record keeping process.

• Purchase: The initial purchase of a currency, which can be through exchange or mining, and is considered an inventory purchase.
• Mining: The initial acquisition of currency through mining, and is considered an inventory purchase.
• Airdrop: Currency obtained through airdrops or currency forks, such as Bitcoin Cash and Bitcoin Gold, and is considered an inventory purchase.
• Sale: The sale of a cryptocurrency, which can be through exchange of a cryptocurrency (for another cryptocurrency or fiat currency) or purchasing a good or service, and is considered an inventory sale. This is considered a taxable event.
• Transfer: Transferring currency between accounts, wallets, or addresses. This is not considered a taxable event.
• None: for anything that hasn’t been categorised. These transactions will be not be included in your inventory reports.

By default, the daily rate for the currency is used to value the transaction for your inventory and FIFO reports, but you can also set the valuation manually – for example, to capture the actual costs incurred in mining, obtaining the airdrop, or as otherwise required by your accounting method.

If you’ve added your accounts to your portfolio through API integrations or supported CSV uploads, then most of your transactions should be automatically categorised into one of these existing types.

You can change the transaction type of any of your transactions by editing the transaction.

Existing valuation

If a transaction has a valuation defined manually, then that value in that valuation currency will be used (and converted through a composite rate if necessary). Otherwise, the value is calculated using a composite rate, as defined below.

What pairs are used?

By default, we use the following priority, to calculate a composite rate for any two given currencies.

1. Identical currencies
   • If we are looking to convert BTC to BTC, then we assert that the exchange rate is identity (1.0).
2. A direct currency to currency rate
   • If we are looking to convert BTC to NZD, and we have an exchange rate on that date for that currency pair (for any exchange), we will prefer to use that exchange rate, rather than going through a third party currency.
   • We remove any exchange pairs from exchanges that are deprecated on the given date, AND are not selected as a preferred exchange.
   • We order the remaining exchange pairs, and select the first exchange that matches:
     • Exchange pairs from a preferred exchange for that portfolio;
     • Exchange pairs from exchanges that are not deprecated (to encourage consistency);
     • And finally, by exchange pairs with the longest available data (the difference between earliest and latest rate).
3. A direct currency to currency (inverse) rate
   • If we are looking to convert BTC to NZD, and we have an exchange that provides NZD to BTC, we calculate the BTC/NZD exchange rate as the inverse of the NZD/BTC rate.
   • We remove any exchange pairs from exchanges that are deprecated on the given date, AND are not selected as a preferred exchange.
   • We order the remaining exchange pairs, and select the first exchange that matches:
     • Exchange pairs from a preferred exchange for that portfolio;
     • Exchange pairs from exchanges that are not deprecated (to encourage consistency);
     • And finally, by exchange pairs with the longest available data (the difference between earliest and latest rate).
4. Through intermediary currencies
   • If we do not have a direct exchange rate, then we calculate the exchange rate by composing different exchange rates together, using the shortest route that we can find through any number of intermediary currencies, using steps 1-3 above.
   • a) Fiat-to-fiat
     • If both exchange currencies are fiat currencies, then we will only use US Dollar (USD) and/or Euro (EUR) as intermediary currencies (in that order). This is to reduce volatility incurred when going through cryptocurrency exchanges.
   • b) Cryptocurrencies
     • Otherwise, if only one (or none) of the exchange currencies are fiat currencies, then we will use Bitcoin (BTC), Ethereum (ETH), US Dollar (USD), or Euro (EUR), as intermediate currencies.
5. Gaps in data
   • Finally, if we are missing exchange data for a given date, but we usually have exchange rate data for that pair, then we will use the next available rate in date descending order.
   • For example, if we are looking for EUR/NZD on 26 May, but we do not have data for that date, then we will use the the exchange rate on 25 May, or 24 May, etc.
   • If we still do not have an available rate, but we have an exchange with data up to one week before the requested date, then we will use the latest rate within the last week. This is necessary to handle fiat currencies, which often do not publish exchange rates for 24 hours or over weekends.
6. No data
   1. If we have gone through all of these steps and still cannot find a composite exchange rate, we will declare the currencies can not be converted.

What time is used for a rate?

For latest conversions, CryptFolio will use the last rate for that exchange pair.

For conversions at a given time, we can calculate composite rates on a daily basis, using the closing rate (close) as at 23:59:59 UTC on that day.

For our inventory reports, we calculate balances as at 00:00 UTC for each day, as most existing financial software and processes expect exchange rates to be calculated only once per day.

In the future, CryptFolio will provide paid users with options for accessing higher-resolution conversions.

Do conversions consider the depth of the order book?

No, only the raw closing price is used, and the available volume is not considered. If you need to consider the depth of order books – for example, your portfolio value is extremely high, and you have regulatory or financial requirements for this additional resolution – please get in touch.

Examples

To illustrate this behaviour, consider a date 2017-01-01 which has the following exchange rates available:

We would calculate the following composite rates, according to the rules above:

Configuring this behaviour

For any composite rate used on CryptFolio, you can view which exchanges were used to calculate the rate, by clicking on the (?) next to the rate:

Currently CryptFolio only supports a single inventory method (FIFO), but in the future we will support other inventory calculation methods. From the Inventory report you can access your Balances report or the FIFO report for your portfolio.

Accessing your Inventory report

You access your inventory report through your balances report.

1. Visit the portfolio that you wish to view the inventory for, and click on the Balances link in the top right of your portfolio.

2. Select the Inventory link for the currency you wish to view.

Calculation

The inventory for a currency, is a sum of all of the transactions in each of your portfolio accounts in that currency, that have a transaction type specified.

For example, if you had one accounts with the following transactions:

The inventory balance would be 1.0 - 0.5 = 0.5 BTC, because transaction #3 would not be included in the inventory.

Fields

For each of the transactions in your portfolio, that are denominated to the report currency, the following fields are displayed:

For any composite rate, you can view which exchanges were used to calculate the rate, by clicking on the (?) next to the rate:

For each of the reporting currencies and non-zero currencies in your portfolio, CryptFolio calculates two values for the currency: your balance, and your inventory.

Accessing your balances

Visit the portfolio that you wish to view the balances for, and click on the Balances link in the top right of your portfolio.

Balance

The balance for a currency is the sum of all of the balances in each of your portfolio accounts.

For example, if you had two accounts with the following balances:

Your BTC balance would be calculated as 3.0 BTC.

By clicking on the Balance link, you can view the Currency Balances report for your portfolio in that currency. This report breaks down the total balance by account, so you can see which accounts are contributing which balances to your total portfolio balance.

You can also select a specific Trial Balance date to view all of the balances in your portfolio at a specific date.

Inventory

The inventory for a currency is a sum of all of the transactions in each of your portfolio accounts, that have a transaction type specified.

For example, if you had one accounts with the following transactions:

The inventory balance would be 1.0 - 0.5 = 0.5 BTC, because transaction #3 would not be included in the inventory.

By clicking on the Inventory link, you can view the Inventory report for your portfolio in that currency.

You can also select a specific Trial Balance date to view all of the balances in each of your accounts for that currency at a specific date.

Verifying Balance and Inventory

You can independently verify the balances and inventories provided by CryptFolio, and this might be a useful part of your record-keeping process.

To verify your balance, visit the balances page for that currency, and independently sum up the values per currency.

To verify your inventory, you can download all of the transactions for each of your individual accounts as CSV, discard transactions that have no transaction type, and sum up the values per currency.