Published: June 23rd, 2020
Ernst & Young LLP (EY) has unveiled CryptoPrep, an application that helps individuals and corporations to file U.S. tax returns. The app targets cryptocurrency traders who will find it easy to calculate and file taxes using the innovation. The new Software as a Service (SaaS) online machine is fully automated and enterprise-grade with a step-by-step guide to aggregating cryptocurrency transactions and calculating capital gains and losses for tax reporting purposes.
Ernst & Young LLP, a member of the “Big Four” professional consulting firms, has launched a cryptocurrency app. The web-based crypto aggregations machine will help U.S. residents to work out their transactions, losses, and gains for tax reporting purposes.
An announcement by Jennifer Hemmerdinger, the firm’s public relations manager for the U.S., said the product that has been christened CryptoPrep, will allow cryptocurrency traders in the country to aggregate their crypto transactions. Further, it will help them tabulate the capital losses and gains and report these using form 8949 of the Internal Review Services.
The announcement adds that CryptoPrep supports several major cryptocurrencies and exchanges. The app uses appropriate tax rules to produce an elaborate account of the customer’s capital gains and losses. Besides, it can generate a complete Form 8949 for all the outstanding tax years.
CryptoPrep and its core technology are available to customers who can access it as a managed service from EY through the firm’s online services EY Blockchain Analyzer and EY TaxChat.
CryptoPrep is the firm’s way of responding to the changing times. According to EY Americas Vice Chair of Tax Services, Marna Ricker, an increasing number of the firm’s clients hold and trade cryptocurrencies and other digital assets. This situation, Marna added, is the reason the firm is working on innovative solutions that address the needs of such clients. These tools address the clients’ evolving and complicated taxes filing requirements for cryptocurrency transactions.
The EY Foundry, which created the app, is the firm’s internal corporate venturing department. It was designed to modernize the process of cryptocurrency tax accounting. EY understands that cryptocurrency transactions set off tax filing obligations. These filing responsibilities are assessed based on the client’s resulting capital profits and losses. Based on the various scenarios, EY’s CryptoPrep computes the client’s cryptocurrency tax responsibilities for the current year. However, it does not stop at that. It can also allow users to amend and submit crypto tax returns for previous years. This feature is especially critical for reconciling previous unreported tax responsibilities.
The Head of EY Foundry, Chirag Patel, said that CryptoPrep widens the innovative portfolio of prosperous new digital businesses. Chirag added that the app is EY’s way of showcasing its commitment to finding solutions for the evolving needs of its worldwide customer base.
CryptoPrep is not the firm’s only product made for cryptocurrency holders, enthusiasts, or dealers in digital financial assets. In April 2018, the firm unveiled EY Blockchain, auditing software meant for cryptocurrency holdings and transactions.
Last year, the accounting firm launched EY Crypto-Asset Accounting and Tax, a product that facilitates tax tabulations and accounting for cryptocurrency transactions. It serves both retail and institutional investors.
The launch of CryptoPrep affirms EY’s position as the global leader in tax, assurance, transaction, and advisory consultancy services. With the insights and services that the firm delivers, capital markets and economies worldwide can operate in an environment of trust and confidence.
Aside from cutting edge technology and innovation, EY Foundry is also responsible for a range of programs and services targeting cryptocurrency traders. These include scaling up and nurturing businesses, pitching startup ideas, raising capital and facilitating mergers and acquisitions, and helping young companies comply with tax reporting regulations.
Besides, the Foundry offers guidance on tax incentives for research and development, company law essentials, people management, building resilience, among a host of other business continuity processes. And, its residents access industry insights from incubators within their localities.
With the three cryptocurrency tax tools, EY has confirmed its membership in a closed niche environment mostly dominated by tech startups. Companies offering cryptocurrency tax software have been all the rage in the recent past.
Lydia O’Neal, a business reporter with Bloomberg, says that the industry is going to grow even further, considering the IRS crackdown. Katya Fischer, a tax lawyer, agrees, adding that the significant growth in the cryptocurrency tax tools is because of the overwhelming demand.
She says an increasing number of cryptocurrency traders and enthusiasts are using or seeking software to help them meet their tax obligations. Katya says that CryptoPrep joins an ever-growing list of other tools.
The EY app is compatible with more than 1,000 coins, which is an attractive feature because most customers’ principal concern is working with and reporting tax for several digital assets. Katya says that the frustration most clients express is having several trades in different cryptocurrencies. She says that such deals are difficult to track or even report accurately.
Lydia thinks that the leading crypto reporting software are BitcoinTaxes, which is owned by CoinTax LLC and CoinTracking headquartered in Munich. She adds that another twelve products have been launched between 2017 and now.
Already, several of these products are seeing an increasing number of traders signing up for their services. Dario Kachel, CEO of CoinTracking, says that the swelling customer base is because of the IRS warning in July 2019. Mid last year, the federal agency in charge of managing the Internal Revenue Code and collecting taxes in the U.S. sent out letters to thousands of crypto traders informing them that they may not have remitted their taxes as they should.
EY’s CryptoPrep is the latest entrant in the cryptocurrency tax software scene. The multinational professional services company has announced the launch of the app, a cryptocurrency reporting tool. CryptoPrep allows users to aggregate their crypto transactions, compute the gains and losses, and prepare the necessary forms for reporting the associated tax liabilities to the relevant authority.