Transaction Assumptions and Entry Order
The cryptocurrency transaction ledger calculations on this simulator handle only spot trades for a single cryptocurrency asset, operating under the assumption of a zero beginning balance with no carryover from prior periods.
Users select either a BUY or SELL transaction type in the input form and enter the quantity alongside the unit price denominated in Japanese Yen (JPY).
This calculation model does not account for transaction fees, meaning the product of quantity and unit price is recorded directly as the total transaction amount.
Input transaction entries are stored sequentially in an array, and up to 500 transactions are processed chronologically in their entered order.
Entering transactions out of chronological order can lead to balance shortfalls or miscalculated average acquisition costs, so entries must be added sequentially starting from the earliest transaction date and time.
Governed by React state management in browser memory, all transformations from inputs to calculation outputs run entirely inside the client browser.
However, subsequent HTTP requests from the browser to the server may include cookies necessary for site analytics or related services.
The tool does not handle complex tax scenarios such as crypto-to-crypto swaps, mining rewards, or transfers across disparate wallet addresses, and processes only positive finite numerical inputs.
Total Average Denominator and Realized Gains
The annual realized profit or loss under the 'Total Average Method (limited zero-initial-balance model)' calculates a single average acquisition cost across all entered purchases within the calendar year.
The calculation engine filters all transactions marked as 'BUY', sums the acquisition cost of each trade (quantity multiplied by unit price) to obtain the total purchase expenditure, and sums the purchased quantities to establish the denominator.
Dividing total purchase expenditure by this aggregate quantity yields the single annual average acquisition unit price. The cost of goods sold for dispositions is evaluated using this single unit price: subtracting the total acquisition cost (total sold quantity multiplied by the average purchase price) from total gross proceeds of all 'SELL' transactions yields annual realized profit or loss.
While this approach reflects the standard principle outlined by the National Tax Agency in Japan, this tool is restricted to a simplified model assuming a zero beginning balance.
If prior-year asset carryovers exist in an actual tax filing, accurate average acquisition costs and realized gains cannot be determined without adding beginning balance units to the denominator and beginning carrying values to the numerator.
Moving Average Cost Updates
In the 'Moving Average Method' presented alongside the total average method for comparison, the average acquisition cost is recalculated after every purchase based on holdings at that specific moment.
In program logic, an evaluation loop initialized with zero holdings processes the input array sequentially from the first entry. When a BUY trade is read, the existing position value (current holding quantity multiplied by the current average unit price) is added to the new transaction value (new quantity multiplied by new unit price), and dividing this sum by the updated total quantity yields the new average acquisition cost.
When a SELL trade occurs, cost of sales is computed using the most recently updated average acquisition cost, and the difference from sales proceeds is added to realized gain or loss.
A sale decreases only holding quantity while maintaining the average unit price until the next purchase takes place. Furthermore, if a complete sale reduces holding balance to zero, the average acquisition unit price is reset to zero, ensuring subsequent purchases start calculations afresh without legacy pricing.
While advantageous for tracking real-time profitability per trade, inserting, deleting, or reordering historical entries causes a cascade of recalculations across all downstream costs.
When entries are deleted via the UI, state is reset and re-evaluated from the remaining list to display consistent updated figures.
Balance Tracking and Overselling Safeguards
Throughout sequential ledger processing, asset balances are strictly tracked at every step, with exceptions thrown for contradictory inputs.
The system checks holdings immediately before executing a sale, and if the sale quantity exceeds available holdings, it returns the error message: 'Sell quantity exceeds current holding balance.
Check beginning balance or entry history.' and halts downstream computations. To prevent floating-point rounding errors from triggering false negatives, the comparison logic applies a tolerance threshold relative to position and transaction scale; tiny discrepancies within tolerance are resolved by snapping balance to zero to continue processing, but overt overselling (negative balances) is strictly blocked.
In addition, quantities and unit prices are restricted to positive finite numbers, with non-positive or non-numeric inputs rejected directly at the UI input level.
Furthermore, if any single transaction value or cumulative acquisition/sale total exceeds 1 quadrillion JPY (1e15)—an application-specific boundary to prevent extreme inputs rather than JavaScript's MAX_SAFE_INTEGER limit—the tool throws an exception to prevent corrupted outputs, noting that fractional inputs are handled and display rounding does not guarantee absolute mathematical precision.
Reference Tax Increments and Aggregate Brackets
The second half of the simulator provides a simplified estimation of reference tax liability by treating positive net gains from the total average method as miscellaneous income (zatsu-shotoku) subject to aggregate taxation (sogo-kazei).
Users specify 'Other taxable income (after deductions)' between 0 and 30 million yen (defaulting to 5 million yen) via a slider or number input.
The calculation logic applies Japan's progressive national income tax brackets for 2026, first establishing a baseline tax on the specified other taxable income alone.
Next, it recomputes tax on aggregate income including cryptocurrency gains (treated as zero if net loss), calculating the incremental income tax difference.
In this process, the 2.1% Special Reconstruction Income Tax is incorporated, with intermediate income tax calculations truncated to the nearest 100 yen after rounding taxable income down to the nearest 1,000 yen.
A flat 10% local inhabitant tax equivalent is then added to the cryptocurrency gain, producing the final estimated reference tax increase rounded to the nearest yen.
This estimate represents only the marginal tax difference of layering reported gains onto baseline income; it does not recalculate social insurance premium adjustments, dependent exemption thresholds, or tax-exempt household classifications.
Under this model's simplified assumptions, losses are not offset against other income categories, resulting in zero tax variation, whereas real-world tax categorization and loss treatments depend on individual circumstances.
Verification Prior to Formal Tax Filing
All figures produced by this tool are arithmetic estimates generated entirely within the front-end browser under restricted assumptions.
Displayed decimal precisions and formatted yen values cannot substitute for official tax ledgers or tax return schedules. Formal tax filing in Japan requires evaluating diverse factors in accordance with tax laws—such as multi-exchange trading histories, crypto-to-crypto swaps, foreign currency pricing, staking and mining rewards, and network transfer fees—converting each correctly into JPY.
This tool offers no interface for these complex events and cannot automatically determine income categorization (such as business income versus miscellaneous income).
Consequently, simulator outputs should be used only for broad preliminary checks of annual volume and tentative tax reserves. When preparing formal tax returns, taxpayers must utilize official cryptocurrency calculation worksheets published by the National Tax Agency or consult a licensed certified tax accountant (zeirishi) with comprehensive trading records and income documentation.