Calculation algorithms for the two major evaluation methods based on the National Tax Agency notification
Gains and losses arising from trading of crypto assets must be calculated in strict accordance with the tax treatment FAQ for crypto assets issued by the National Tax Agency in Japan.
This calculation mechanism implements calculation algorithms for both the moving average method and the total average method, which are recognized methods for calculating acquisition costs.
The moving average method is a dynamic calculation method that calculates a new average unit price each time you purchase a crypto asset by adding the currently purchased quantity and acquisition price to the quantity held immediately before the purchase and the book value of the held asset.
At the time of sale, the cost is allocated based on this latest average unit price, and the difference between the sale price and the sale price is determined as realized profit or loss.
On the other hand, the gross average method is a static calculation method that calculates a single standard unit price for the year by dividing the total acquisition price of crypto assets acquired over one tax period by the total acquisition quantity for the same tax period.
If you choose the total average method, you will need to recalculate the cost using a single average unit price calculated at the end of the period, regardless of the sale at any point during the period.
By running a dynamic simulation based on assumed data at the end of the period, we mathematically predict the final profit and loss point for the entire year.
By switching between these two calculation logics according to the user's own notification status, it becomes possible to completely reproduce an appropriate cost allocation process for tax purposes.
Gradual tax rate calculation of miscellaneous income under comprehensive taxation system and restrictions on profit and loss aggregation
In principle, profits generated from crypto asset transactions are classified as miscellaneous income and treated as subject to comprehensive taxation.
The tax calculation model in this system applies an excess progressive tax rate that is applied in stages to the total income amount, which is the sum of the user's salary income and other income and miscellaneous income from crypto assets.
The income tax rate is divided into seven levels from 5% to a maximum of 45% depending on the amount of income, and a uniform 10% resident tax is added to this, so the program simulates a structure in which a high tax burden of up to 55% occurs.
Furthermore, this model strictly implements rules that prevent profits and losses from being aggregated with other income categories in the event that miscellaneous income from crypto assets is in the red.
In other words, since it is not legally permitted to deduct losses incurred in crypto asset transactions from employment income, real estate income, etc., the negative balance of crypto assets generated on the calculation engine does not function as a factor in reducing the tax base of other income at all, and calculations are rounded down within a single year.
By accurately reflecting such asymmetric tax characteristics, it becomes possible to grasp the discrepancy between the actual take-home pay and tax burden in advance and with extremely high accuracy when filing a final tax return.
Profit and loss determination based on vesting of rights and market value evaluation when exchanging crypto assets
Direct exchange between crypto assets without going through legal currency, such as acquiring Ethereum using Bitcoin, is considered for tax purposes as selling the Bitcoin you held at the current market price and purchasing new Ethereum using the sale proceeds.
This mechanism is equipped with logic that obtains the market value of the crypto asset being relinquished from external data or from an input value based on the timestamp of the moment when this inter-asset exchange transaction occurs, and immediately includes the difference between that market value and the book value of the source crypto asset as realized profit or loss due to vesting.
In this market value evaluation process, the deemed sale consideration is calculated using the contract rate at the time of exchange or the reference market median price, and the profit or loss is derived by subtracting it from the acquisition cost calculated using the moving average method or gross average method described above.
At the same time, for the newly acquired crypto assets, an amount equal to the deemed sale consideration will be recorded in the books as a new acquisition price, and it will begin to function as a cost base for future sales.
Users simply enter the quantity and rate exchanged, and the system internally breaks it down into two separate transactions, a sale transaction and a purchase transaction, and automatically completes the sophisticated vesting decisions required by tax authorities.
On-memory processing of transaction history and unit prices in the browser local environment
All transaction transactions entered into this tool, including purchase date and time, purchase unit price, purchase quantity, sale unit price, sale quantity, and various associated fee data, are processed completely independently within the local memory area of the user's browser without being sent to an external database server.
This client-side computational architecture eliminates the risk of highly sensitive personal financial transactions being leaked across the network.
In memory, the input time-series data is stacked as an array, and the calculation engine scans each transaction in chronological order while dynamically updating the current holding quantity and book unit price.
When a purchase event occurs, the amount held is increased and the total acquisition price is recalculated; when a sale event occurs, the amount held is decreased and realized profits and losses are confirmed in microseconds.
Even in the unlikely event that the input content is modified, the state management mechanism rebuilds the on-memory transaction list and immediately re-evaluates the entire calculation tree from the first transaction to the present, so users can continue to check the accurate current holding quantity and average acquisition price trends in real time without experiencing any delay.
Graphical visualization of portfolio valuation gains/losses and realized gains/losses
More than just a list of numbers, this tool provides a graphical calculation interface that allows you to intuitively understand complex profit and loss information.
The data stream output from the internal calculation engine is passed to a rendering mechanism that clearly separates and depicts the cumulative amount of realized gains and losses that have already been determined as profits, and the undetermined unrealized gains and losses based on the current market price of the crypto assets currently held.
A realized profit/loss graph shows the accumulation of taxable amounts in the current year determined by past sales or exchange transactions using a bar graph, etc., while an unrealized profit/loss graph shows the size of the potential profit or loss that could occur if you sell in the future.
This allows users to understand the balance of risk and return contained in their entire portfolio at a glance.
Furthermore, by varying the virtual current sales rate using an interface such as a slider, it is possible to visually perform a dynamic simulation of how unrealized gains and losses will change and what impact this will have when converted to realized profits and losses in the future, providing an environment for deeply analyzing the sensitivity of owned assets to changes in value.
Optimizing tax estimation and strategic profit determination timing in anticipation of final tax return
The true value of this calculation tool is not only in aggregating past transaction history, but also in supporting proactive strategy planning for the approaching tax return period.
Users can always check the provisional estimated amount of miscellaneous income based on realized profits and losses to date and the estimated tax amount.
In addition, you can use the what-if analysis function that verifies how your total income and final tax payment will change if you sell some of the crypto assets you currently own and lock in your profits, or if you sell assets with unrealized losses and lock in your losses, during the remaining period until the end of the year.
For example, if other income is expected to be low this year, you can take advantage of the low excess progressive tax rate by deciding on profits within the year, and conversely, if you have already decided on large profits, you can sell crypto assets with unrealized losses to reduce profits and losses.It is possible to simulate advanced tax control.
In this way, this tool goes beyond being a simple calculator and functions as a powerful navigation system that allows users to explore strategic profit-taking timing to legally and rationally maximize their take-home assets under complex tax systems.