To start, we all know that taxes are not a sexy topic. Everyone wants to have fun with Defi and trading now, and then think about the tax consequences later. The problem with current crypto tax software is that most are trying to be so widely inclusive in their attempt to capture every crypto and blockchain out there, that they cannot read and parse on chain activity very well, if at all. In addition, most other software is unable to read the the separate staking key that Cardano uses, which creates a situation where most crypto tax software implementations lack the ability to create a comprehensive snapshot of the user’s tax situation from all of their blockchain activity. Further, the multi-asset nature of Cardano creates unknow and issues that cannot be identified until encountered, which will require special attention and organization.

Simple Example: User sends 2 units of crypto to a smart contract and in the future receives back 2.4 units. In almost all instances of current tax software, the software cannot easily link the transactions to separate the gain and the basis from that trade, and the user would need to manually split their gains from the trades and create a new item in their personal accounting (as in outside of the software) for that gain and the accompanying tax basis.

Current Team: Bill Najmy will serve as the project manager and tax compliance lead. Bill is a US tax attorney licensed in the state of Florida, with an LL.M Masters in the laws of taxation. Bill has written multiple academic papers about US tax policies related to cryptocurrency transactions. Prior to tax law, Bill was a project manager for the Asolo Center for Performing Arts, and regularly managed production projects whose budgets ranged upwards of $1,000,000. Bill is also familiar with the basics of software development, and has begun creating a similar software implementation on the Tezos blockchain. The listed website is the working model of this software, called Back to Basis . Tax

Project Goal: The number one goal is to create a cost effective US based tax compliance software, that is ideally free to for most users, as well as eventually handle international tax compliance. The second priority goal of this project is to create tax tool that can grow with the Cardano ecosystem, especially in the Defi area, as well as meet the specific needs of the Cardano platform and community. The result will be a report of the comprehensive tax picture for the user that includes the determination of income from staking ADA, any gain or loss from selling ADA, income from receiving payments in ADA for any other reason, and the potential tax liability form sales or exchanges of ADA that was received, but not purchased. All of this, plus the inclusion of how to factor in native tokens, and what results from interacting with smart contracts.

Project Phases: This project will require hiring no more than 2 professional freelance software developers. At least 90% of any secured funds will go towards this portion of the project. $!5,000 - The first phase of this project is to develop a private and stable price oracle and REST-API database bridge that is suitable for traditional tax finance reporting purposes. While there are other API’s available, none currently have all the features necessary to facilitate this project. Part of the sustainability of the project will be to sell access to oracle and API to third parties.

$12,000 - The second phase of this project is to develop a useful web-based front end that creates a simple and intuitive user experience. The goal of the second phase will be to generate tax reports based on the users on chain activity. This phase will still require users to self report their tax liability.

$8,000 - The third phase of the project is to be able to generate useful tax forms that the user can then take to their own tax professional or use in conjunction with self filing with their respective tax authority.

Working Product Expected Q1 of 2022

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