Crypto Tax Workflow Base

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

What this file is

Universal workflow for cryptocurrency and digital asset tax compliance. Defines the classification framework, cost basis methods, transaction type taxonomy, and output format that every country-specific crypto tax skill builds on. No rates, no thresholds, no country-specific rules — those come from the country skill.

Must be loaded with at least one country-specific crypto tax skill (e.g., uk-crypto-tax.md, us-crypto-tax.md). This file alone cannot produce any output.

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Step 1 — Onboarding: what to collect

Before computing anything, obtain ALL of the following:

#	Required input	Why
1	Which digital assets are held (BTC, ETH, stablecoins, NFTs, DeFi tokens, memecoins)	Determines classification rules
2	Transaction history source — exchange CSVs, on-chain wallet exports, DeFi protocol records	Raw data for computation
3	Acquisition dates and costs per lot in local fiat equivalent	Cost basis tracking
4	All disposal events — sells, swaps (crypto-to-crypto = disposal in most jurisdictions), gifts, payments	Taxable event identification
5	Mining/staking/yield farming/liquidity rewards — amounts received, FMV at receipt	Income recognition
6	Airdrops and hard forks — what received, when, whether any action was required	Classification varies by jurisdiction
7	NFT activity — minting costs, sales proceeds, royalties received, platform fees	Separate reporting in some jurisdictions
8	Cost basis method elected — FIFO, LIFO, specific ID, average cost	Country skill determines which are permitted
9	Prior year losses carried forward	Offset computation
10	Exchange accounts — domestic and foreign	FBAR/foreign reporting obligations

If any of inputs 1-4 are missing, STOP and request them. Cannot compute without transaction history and cost basis.

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Step 2 — Transaction type taxonomy

Every crypto transaction maps to exactly one of these types. The country skill determines the tax treatment of each.

Disposals (potential capital gain/loss)

Type	Description	Taxable event?
Sell for fiat	BTC → USD/EUR/GBP	Yes — always
Crypto-to-crypto swap	BTC → ETH	Yes in most jurisdictions (check country skill)
Payment for goods/services	Using crypto to buy something	Yes — disposal at FMV
Gift	Transferring to another person	Varies — some jurisdictions tax donor, some recipient, some neither
Lost/stolen	Permanently inaccessible	Varies — some allow capital loss, some don't

Income events (ordinary income at FMV)

Type	Description	When recognized
Mining	Proof-of-work block rewards	When coins received in wallet
Staking	Proof-of-stake validation rewards	When rewards credited (jurisdiction-dependent)
Yield farming	DeFi liquidity provision returns	When tokens received
Airdrops	Free tokens distributed	At receipt if no action required; at claim if action required
Hard forks	New chain creates new tokens	Varies by jurisdiction — some at fork, some at first disposal
Payment for services	Employer/client pays in crypto	At receipt, FMV in local currency
Interest	CeFi/DeFi lending returns	When credited
Referral/bounty rewards	Platform rewards	At receipt

Non-taxable events (no gain/loss computed)

Type	Description	Note
Transfer between own wallets	Moving from exchange to hardware wallet	Same owner — no disposal
Buying with fiat	USD → BTC purchase	Establishes cost basis only
Wrapping/unwrapping	ETH → WETH	Generally not taxable (same underlying asset)
Chain migration	Token upgrade on same protocol	Generally not taxable

DeFi-specific events

Type	Tax treatment	Complexity
Liquidity pool deposit	Potentially a disposal (country-dependent)	High — impermanent loss not always deductible
Liquidity pool withdrawal	Potentially an acquisition + disposal	High
Borrowing against crypto	Generally not a taxable event	Medium — but liquidation IS taxable
Lending crypto	May be a disposal or may retain ownership	High — jurisdiction-dependent
Governance token rewards	Income at FMV when received	Medium
Flash loans	Generally no tax impact if repaid in same transaction	Low

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Step 3 — Cost basis methods

The country skill specifies which methods are permitted. Universal definitions:

Method	How it works	Effect on tax
FIFO (First In, First Out)	Oldest lots disposed first	In rising markets: higher gains (older = lower cost)
LIFO (Last In, First Out)	Newest lots disposed first	In rising markets: lower gains (newer = higher cost)
Specific identification	Taxpayer chooses which lot	Maximum flexibility — can minimize tax
Average cost	Total cost / total units	Simple but no lot-level optimization
S104 pool (UK-specific)	Weighted average pool	Required for UK shares/crypto

Conservative default: FIFO unless the country skill permits and the taxpayer has elected another method.

Cost basis tracking rules

1. Acquisition cost includes: purchase price + exchange fees + network gas fees + transfer fees
2. Crypto-to-crypto swaps create a NEW cost basis for the received asset at the FMV of the disposed asset
3. Staking/mining income establishes cost basis at the FMV on the date of receipt
4. Airdrops — if taxed as income at receipt, cost basis = FMV at receipt. If not taxed at receipt (e.g., unsolicited, zero-value), cost basis = zero
5. Hard forks — country-specific. Some jurisdictions assign zero basis, others use FMV at fork
6. All values must be converted to local fiat at the transaction date using a consistent exchange rate source (CoinGecko, CoinMarketCap, or the exchange's own reported price)

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Step 4 — Gain/loss computation

For each disposal:

Gain or Loss = Proceeds (FMV in local fiat) − Cost Basis − Allowable Fees

Then apply the country skill's rules for:

• Holding period — short-term vs long-term (thresholds vary: 1 year US/UK, 0 for some, varies by country)
• Tax rate — capital gains rate vs ordinary income rate
• Exemptions — annual exempt amount, de minimis thresholds, personal use exemptions
• Loss offset — which gains can losses offset? Carry-forward rules?
• Wash sale / bed-and-breakfasting — anti-avoidance rules on repurchasing after a loss

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Step 5 — Income computation

For each income event (mining, staking, airdrops, etc.):

Taxable Income = FMV at Receipt (in local fiat)

Country skill determines:

• Whether taxed as ordinary income, miscellaneous income, or a special category
• Whether business deductions apply (electricity for mining, hardware depreciation)
• Whether there's a de minimis threshold below which income is not taxable
• Self-employment tax / social contribution implications

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Step 6 — Reporting obligations

Country skill specifies the forms, but universal requirements include:

Obligation	What to report
Capital gains schedule	Every disposal: date acquired, date sold, proceeds, cost basis, gain/loss
Income schedule	Mining/staking/airdrop income with FMV at receipt
Foreign account reporting	Balances on foreign exchanges (FBAR, Form 8938, DAC8 equivalent)
Digital asset question	Whether taxpayer transacted in digital assets during the year
Annual crypto return	Some jurisdictions require a separate crypto-specific filing

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Step 7 — Output specification

Produce these artifacts:

1. Crypto transaction ledger

For every transaction in the period:

Date	Type	Asset	Amount	FMV (local)	Cost basis	Gain/Loss	Holding period	Tax treatment

2. Capital gains summary

Category	Short-term gains	Short-term losses	Long-term gains	Long-term losses	Net
Crypto-to-fiat
Crypto-to-crypto
NFT sales
DeFi disposals
Total

3. Income summary

Source	Amount (local fiat)	Tax treatment
Mining rewards
Staking rewards
Airdrops
DeFi yield
Payment for services
Total crypto income

4. Reviewer brief

• Cost basis method used and justification
• Assumptions made (with conservative default disclosed)
• FMV source used for valuations
• Foreign exchange reporting obligations triggered
• Any wash sale / anti-avoidance flags
• Items requiring professional judgment

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Conservative defaults

Ambiguity	Conservative default
Unknown acquisition cost	STOP — cannot compute without cost basis. Ask user.
Unknown holding period	Short-term (higher rate)
Unknown whether income or capital	Income (higher rate)
Unknown FMV at receipt	CoinGecko/CoinMarketCap daily close in local fiat
Unknown cost basis method	FIFO
Airdrop — no clear service performed	Income at FMV on receipt
Staking — unclear when rewards received	At the earliest possible date (more income recognized sooner)
DeFi LP deposit — unclear if disposal	Treat as disposal (more conservative)
Lost/stolen crypto — no evidence	No loss claim (cannot substantiate)
Crypto-to-crypto swap	Taxable disposal (even if some jurisdictions haven't clarified)

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Self-checks (run before delivering)

1. Every disposal has a computed cost basis (no blanks)
2. Crypto-to-crypto swaps are treated as taxable disposals
3. Mining/staking income is recognized at FMV on receipt date
4. FMV source is consistent across all transactions
5. Cost basis method is the same for all disposals of the same asset (no cherry-picking without specific ID election)
6. Foreign exchange reporting threshold checked
7. Annual crypto/digital asset question answered correctly
8. Wash sale / anti-avoidance rules applied where applicable
9. Prior year loss carryforward applied if available
10. All amounts in local fiat currency
11. Gas fees allocated to correct transaction (disposal fee vs acquisition cost)
12. NFTs treated correctly (collectibles rate if applicable)

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Refusals

Trigger	Action
No transaction history available	STOP — cannot compute without data
Day trading as primary income with hundreds of trades and no CSV	STOP — manual entry impossible
DeFi protocol with unclear tax treatment and no country guidance	Flag for reviewer, apply conservative default, disclose uncertainty
Crypto earned through illegal activity	REFUSE
Tax evasion planning ("how do I hide my crypto")	REFUSE

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Disclaimer

This workflow base and its outputs are for informational and computational purposes only and do not constitute tax, legal, or financial advice. Cryptocurrency taxation is rapidly evolving and many jurisdictions have unclear or changing rules. All outputs must be reviewed by a qualified professional before filing.