RP2 v0.9.6
Table of Contents
- Introduction
- License
- Download
- Installation
- Running
- Input and Output Files
- Reporting Bugs
- Contributing
- Developer Documentation
- Frequently Asked Questions
- Change Log
Introduction
RP2 is a privacy-focused, free, open-source US cryptocurrency tax calculator, that is up to date for Fiscal Year 2021. Preparing crypto taxes can be a daunting and error-prone task, especially if multiple transactions, coins, exchanges and wallets are involved. This task could be delegated to a crypto tax preparation service, but many crypto users value their privacy and prefer not to send their transaction information to third parties unnecessarily. Additionally, many of these services cost money. RP2 solves all of these problems:
- it manages the complexity related to coin flows and tax calculation and it generates data that accountants can understand (in the format of form 8949), even if they are not cryptocurrency experts;
- it prioritizes user privacy by storing crypto transactions and tax results on the user's computer and not sending them anywhere else;
- it's free and open-source;
- it supports the FIFO and LIFO accounting methods.
RP2 reads in a user-prepared spreadsheet containing crypto transactions. It then uses high-precision math to calculate long/short term capital gains, cost bases, balances, average price, in/out lot relationships/fractions, and finally it generates output spreadsheets.
It has a programmable plugin architecture for output generators, accounting methods and countries. The builtin plugins are US-specific, but RP2's architecture makes it possible to contribute additional output generators for different countries or for different US-based cases. The builtin plugins are:
- tax_report_us: generates a tax report meant to be read by tax preparers (in the format of form 8949);
- rp2_full_report: generates a comprehensive report, with complete transaction history, lot relationships/fractions and computation details.
RP2 has extensive unit test coverage to reduce the risk of regression.
IMPORTANT DISCLAIMERS:
- RP2 offers no guarantee of correctness (read the license): always verify results with the help of a tax professional.
- The author of RP2 is not a tax professional, but has used RP2 personally for a few years.
How RP2 Operates
RP2 treats virtual currency as property for tax purposes, as per IRS Virtual Currency Guidance.
RP2 suports the FIFO and LIFO accounting methods: however, in and out lots typically don't have matching amounts, so RP2 fractions them, maps in/out lot fractions and computes the resulting cost bases and capital gains for each lot fraction.
RP2 groups lot fractions into the following taxable event categories, each of which has a specific tax treatment:
- AIRDROP: gains from airdrops;
- DONATE: donations to charitable organizations;
- GIFT: gifts to parties who are not charitable organizations (not tax-deductible).
- HARDFORK: gains from hard forks;
- INTEREST: gains from interest;
- MINING: gains from mining;
- MOVE: the fee for moving currency between two accounts controlled by the same owner; these may not be taxable or tax deductible but they still affect the accounting method order so they are tracked;
- SELL: specifically, sale and exchange of one cryptocurrency for another. RP2 splits them in two subcategories:
- long-term capital gains, if the lot was held for more than 1 year, or
- short-term capital gains otherwise;
- STAKING: gains from staking;
- WAGES: income from crypto wages.
For each of these categories RP2 generates an output spreadsheet with transaction details and computed gains/losses (see Input and Output Files for more details). Users can give this output to their tax preparer with the rest of their tax documentation (see also FAQ on which tax forms to file). Note that buying cryptocurrency using fiat currency is not a taxable event.
NOTE ON NFTs: Read the FAQ on NFTs to learn about how RP2 treats NFTs.
License
RP2 is released under the terms of Apache License Version 2.0. For more information see LICENSE or http://www.apache.org/licenses/LICENSE-2.0.
Download
The latest version of RP2 can be downloaded at: https://pypi.org/project/rp2/
Installation
RP2 has been tested on Ubuntu Linux, macOS and Windows 10 but it should work on all systems that have Python version 3.7.0 or greater.
Installation on Ubuntu Linux
Open a terminal window and enter the following commands:
sudo apt-get update
sudo apt-get install python3 python3-pip
Then install RP2 Python package requirements:
pip install rp2
Installation on macOS
First make sure Homebrew is installed, then open a terminal window and enter the following commands:
brew update
brew install python3
Then install RP2 Python package requirements:
pip install rp2
Installation on Windows 10
First make sure Python 3.7 or greater is installed (in the Python installer window be sure to click on "Add Python to PATH"), then open a PowerShell window and enter the following:
pip install rp2
Installation on Other Unix-like Systems
- install python 3.7 or greater
- install pip3
pip install rp2
Running
Before running RP2, the user must prepare two files:
- an ODS-format spreadsheet, containing crypto transactions (ODS-format files can be opened and edited with LibreOffice and many other spreadsheet applications);
- a JSON config file, describing the format of the spreadsheet file: what value each column corresponds to (e.g. timestamp, amount, exchange, fee, etc.) and which cryptocurrencies and exchanges to expect.
The formats of these files are described in detail in the Input Files section of the documentation.
Examples of an input spreadsheet and its respective config file:
- input/crypto_example.ods
- config/crypto_example.config (if desired, this config file can be used as boilerplate).
After reading the input files, RP2 computes taxes and generates output files, which contain information on long/short capital gains, cost bases, balances, average price, in/out lot relationships and fractions. They are described in detail in the Output Files section of the documentation.
To try RP2 with example files, download crypto_example.ods and crypto_example.config. Let's call
the location of the downloaded files.
To generate output for the example files open a terminal window (or PowerShell if on Windows) and enter the following commands:
cd
rp2_us -o output -p crypto_example_ crypto_example.config crypto_example.ods
Results are generated in the output
directory and logs are stored in the log
directory.
To print command usage information for the rp2_us
command:
rp2_us --help
Input and Output Files
Read the input files and output files documentation.
Reporting Bugs
Read the Contributing document.
Contributing
Read the Contributing document.
Developer Documentation
Read the developer documentation.
Frequently Asked Questions
Read the user FAQ list and the developer FAQ list.
Change Log
Read the Change Log document.