Terms Defined

This glossary defines key terms as they are used within NODE40 Balance and the broader context of cryptocurrency accounting and tax reporting. Terms are organized alphabetically within each category.

NODE40 Platform Terms

Account Generally refers to a specific centralized exchange account or subaccount, a digital asset address (or x/y/zpub for UTXO-based blockchains), or another access point through which a user interacts with digital assets. Examples: two Ethereum addresses, one Bitcoin xpub, one Solana account, one Coinbase account, two Coinbase subaccounts, and one Custom Upload file = eight total accounts across five distinct sources.

Address Label A custom name assigned to a wallet address in NODE40 Balance. Labels replace the raw address string everywhere it appears in your portfolio, making it easier to identify counterparties, your own wallets, or exchange addresses within your transaction history.

Archive Removing a source or ledger from active view in your portfolio without permanently deleting it. Archived data is excluded from calculations but can be restored. See also: Ignore / Ignored Ledger.

Balance Sheet Report NODE40's primary exportable report, delivered as an Excel file with multiple tabs. Tabs include: Transactions, Gains/Losses, Unrealized Gains, Closing Position, and Ignored Ledgers. Can be generated for any date range — all-time, by year, quarter, month, or custom range.

Custom Upload NODE40's file-based import method for sources that are not natively supported. Users create a CSV file following NODE40's schema and upload it to their portfolio. Individual ledgers are created automatically for each token in the file.

Ignore / Ignored Ledger A feature that excludes a specific ledger from all gain/loss calculations and prevents it from reappearing after future syncs. Commonly used to remove spam or scam tokens. All ignored ledgers are listed in the Ignored Ledgers tab of the Balance Sheet Report for audit transparency and can be restored at any time. See also: Archive.

Ledger A grouping of transactions organized by account and asset. NODE40 tracks on an account-by-account (wallet-by-wallet) basis. Each account may have many associated ledgers — one per token with activity.

Manual Entry A transaction added directly by the user within a ledger, rather than imported from a connected source. Manual transactions can be deleted but cannot be edited after saving.

Natively-Supported Sources Sources listed in the NODE40 platform UI for which NODE40 provides a direct, built-in integration. Sources not natively supported can be imported using the NODE40 Custom Upload file and schema.

Organization (Org) A structure in NODE40 that allows administrators to manage multiple profiles (clients) from a single account. Used primarily by accounting firms, fund managers, and enterprise clients. Contains three user roles: Administrator, Team Member, and Managed Profile.

Profile A collective set of accounts loaded for a single entity. For example, if a client has four business entities and wants separate financial data for each, they would have four profiles. Also referred to as a "Managed Account" within an Organization.

Rebuild The process of deleting and re-importing all data for a specific source (wallet or exchange) from scratch. Note: rebuilding a source removes all manual transactions, tags, and modifications made within that source's ledgers.

Recalculating Banner An indicator displayed in the NODE40 interface when the platform is recalculating gain/loss data following a sync or modification. New reports cannot be generated until recalculation is complete.

Roll Forward An upload of closing token balances, cost basis, and related data as of a specific date for each ledger. Used to carry prior-year or prior-platform data into NODE40 as opening balances, enabling continuity across tax years or when switching from another provider.

Rule (Rules-Based Tagging) An automated tagging configuration that applies a tag to all transactions associated with a specific wallet address or counterparty. Rules eliminate the need to manually tag recurring transaction types from known addresses.

SMART Group Stands for Simple Multi-Account Reconciliation Technology. SMART Groups consolidate all ledgers for a single token across all portfolio sources, providing a complete view of holdings, value, and gains while maintaining account-level cost basis segregation for IRS compliance.

Source Generally refers to a centralized exchange, blockchain, file upload, or other origin of digital asset, fiat, or transaction data. Examples: Ethereum, Bitcoin, Solana, Coinbase, and NODE40 Balance Custom Upload file.

Sourceless Ledger A ledger that represents the other side of a transfer when the receiving wallet or platform isn’t visible to the system. It acts as a placeholder to preserve cost basis and prevent the transaction from being treated as a taxable disposition, even though NODE40 can’t directly track the destination wallet. It is created when a transaction is manually (by the user) marked as a transfer, but the receiving wallet, chain, or platform is not connected to NODE40.

Sync / Syncing The process of pulling new transactions from connected sources into NODE40 Balance. Syncing must be triggered manually by the user — either for all sources at once via "Sync All" or selectively per source. NODE40 does not automatically import new activity.

Tag A user-defined label applied to one or more transactions for categorization, annotation, or reporting purposes. Tags appear in the Transactions tab of the Balance Sheet Report and can be used to filter the Timeline view on the UI. Tags can be applied individually, in bulk, or automatically via rules.

Team-Managed Profile A managed account within an Organization where Administrators and Team Members handle all data management. The client (profile owner) does not have direct access to the platform.

Tracking Ledger A special ledger type used for DeFi transactions where an asset is moved to a protocol (e.g., as collateral in a lending protocol) but has not been disposed of. Tracking ledgers preserve cost basis and ownership data until the asset is returned to the user's wallet.

Transaction A record in NODE40 Balance. The transaction count for a profile is the aggregate number of records across all ledgers, regardless of the year of the transaction.

User-Managed Profile A managed account within an Organization where the client (profile owner) has been invited to access and manage their own data directly. Both the profile owner and the Org's Admins and Team Members can view and manage the profile's data.

Accounting & Tax Terms

Acquisition The event by which a user comes to own a digital asset. Acquisitions include purchases, trades, mining rewards, staking rewards, airdrops, and hard fork distributions — each of which creates a new tax lot with a cost basis equal to the asset's fair market value at the time of receipt.

Closing Position The ending balance, cost basis, and unrealized gain/loss for each asset held as of a specific date. NODE40 generates a Closing Position report that can be used for year-end planning or as the source data for a Roll Forward.

Cost Basis The original value of an asset at the time of acquisition, typically its fair market value in USD. Cost basis is subtracted from the proceeds of a sale or trade to calculate the resulting gain or loss.

Disposition Any event that results in the sale, trade, exchange, or other taxable transfer of a digital asset. A disposition triggers a capital gain or loss calculation based on the asset's cost basis and the proceeds received.

FIFO (First In, First Out) An accounting method in which the oldest tax lots (earliest acquisitions) are used first when calculating gains or losses on a disposition. FIFO is the default accounting strategy in NODE40 Balance.

HIFO (Highest In, First Out) An accounting method in which the tax lots with the highest cost basis are consumed first on a disposition. HIFO typically minimizes taxable gains and is a popular strategy for tax efficiency.

Holding Period The length of time an asset has been held since acquisition. The holding period determines whether a gain or loss is classified as short-term or long-term. Assets held for 12 months or less are short-term; assets held for more than 12 months are long-term.

LIFO (Last In, First Out) An accounting method in which the most recently acquired tax lots are used first when calculating gains or losses on a disposition.

Long-Term Capital Gain / Loss A gain or loss on an asset held for more than 12 months. Long-term gains are generally taxed at lower, preferential rates compared to short-term gains. NODE40 automatically classifies gains based on holding period.

Opening Balance The balance and cost basis of assets held at the start of a reporting period, typically entered as part of a Roll Forward. Opening balances resolve negative balances that may appear when a portfolio is set up with a cutoff date that excludes prior transaction history.

Ordinary Income Income taxed at the same rates as wages and salary, rather than at capital gains rates. In the context of cryptocurrency, ordinary income typically applies to staking rewards, mining income, airdrops received as compensation, and certain DeFi yields.

Realized Gain / Loss The actual profit or loss recognized when a digital asset is sold, traded, or otherwise disposed of. Realized gains are potentially taxable in the year they occur. Contrast with Unrealized Gain / Loss.

Short-Term Capital Gain / Loss A gain or loss on an asset held for 12 months or less. Short-term gains are taxed at ordinary income rates, which are typically higher than long-term capital gains rates.

Specific Identification An accounting method in which the user manually selects which specific tax lots to use for a given disposition. This provides the most control over tax outcomes and can be used for targeted gain or loss harvesting.

Tax Lot A record created for each acquisition of a digital asset, capturing the asset, quantity, cost basis, acquisition date, and source. Tax lots are consumed — in the order determined by your accounting strategy — when you dispose of an asset.

Tax-Loss Harvesting A tax strategy in which assets with unrealized losses are sold to realize those losses, which can then offset taxable gains elsewhere in the portfolio. NODE40's Unrealized Gains report can help identify candidates for tax-loss harvesting before executing trades.

Unrealized Gain / Loss The difference between the current market value of an asset still held and its original cost basis. Unrealized gains and losses become taxable only upon disposition. NODE40 provides an Unrealized Gains report to help users assess their current position.

Wash Sale A rule that disallows a tax deduction for a loss when the same or substantially identical security is repurchased within 30 days before or after the sale. As of current IRS guidance, the wash sale rule does not apply to cryptocurrency — though this may be subject to future legislation. NODE40 does not apply wash sale adjustments to crypto transactions.

Cryptocurrency & Blockchain Terms

API Key A credential that grants a third-party application — such as NODE40 Balance — read-only or full access to a user's exchange account data. NODE40 recommends using read-only API keys whenever possible to limit exposure. API keys vary by exchange; see the NODE40 Knowledge Base for exchange-specific setup guides.

Airdrop A distribution of tokens to wallet addresses, typically at no cost to the recipient. Airdrops may be taxable as ordinary income at the fair market value of the tokens on the date of receipt, depending on the nature of the distribution.

Block / Blockchain A blockchain is a distributed, immutable ledger that records all transactions for a given network (e.g., Bitcoin, Ethereum). Each "block" contains a batch of transactions and is cryptographically linked to the previous block, forming a chain. All on-chain transactions recorded by NODE40 originate from public blockchain data.

Bridge Transaction A cross-chain transfer that moves an asset from one blockchain network to another (e.g., from Ethereum to Solana). Bridge transactions can be complex from a tax perspective and may involve intermediate tokens or wrapped representations of the original asset.

CEX (Centralized Exchange) A cryptocurrency exchange operated by a central company that acts as an intermediary between buyers and sellers (e.g., Coinbase, Kraken, Binance). CEXs typically support API connections for data import into NODE40.

DEX (Decentralized Exchange) A cryptocurrency exchange that operates via smart contracts on a blockchain, without a central intermediary (e.g., Uniswap, Curve). DEX transactions are recorded on-chain and imported via wallet address connections in NODE40.

Gas Fee A fee paid to blockchain validators (miners or stakers) to process a transaction on a proof-of-work or proof-of-stake network. On Ethereum, gas fees are paid in ETH. Gas fees paid on asset purchases may be added to cost basis; gas fees paid on dispositions may be deducted from proceeds.

Hard Fork A change to a blockchain's protocol that is not backward-compatible, resulting in a split into two separate chains. Recipients of new tokens from a hard fork (e.g., Bitcoin Cash from Bitcoin) may owe ordinary income tax on the fair market value of the tokens received.

IRS Form 8949 The IRS tax form used to report sales and dispositions of capital assets, including cryptocurrency. NODE40 generates a pre-formatted Form 8949 as part of the Balance Sheet Report, listing each disposition with dates, cost basis, proceeds, and gain or loss.

Liquidity Pool / LP Token A liquidity pool is a smart contract holding reserves of two or more tokens that enables decentralized trading. When a user deposits tokens into a liquidity pool, they receive LP tokens representing their share. Depositing and withdrawing from liquidity pools may trigger taxable events and involves complex accounting that NODE40 handles through DeFi Transaction Intelligence.

NFT (Non-Fungible Token) A unique digital asset recorded on a blockchain, representing ownership of a specific item (artwork, collectible, in-game asset, etc.). NFT purchases, sales, and mints are taxable events subject to capital gains rules. NODE40 tracks NFT transactions, including gas fees and mint costs.

On-Chain Transaction A transaction carried out and recorded on a blockchain network. On-chain transactions are publicly verifiable and permanently stored on the blockchain. NODE40 imports on-chain data via wallet address or public key connections.

Schedule D The IRS tax form used to summarize total capital gains and losses from all sources, including cryptocurrency. Form 8949 feeds into Schedule D, which is filed with the individual income tax return (Form 1040).

Smart Contract A self-executing program stored on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met. DeFi protocols, DEXs, NFT platforms, and many other blockchain applications are built on smart contracts. Interactions with smart contracts often generate multiple on-chain transactions that NODE40 interprets contextually.

Soft Fork A backward-compatible upgrade to a blockchain's protocol. Unlike a hard fork, a soft fork does not create a new chain or distribute new tokens.

Spot Transaction The buying and selling of digital assets at current market prices, with settlement at or near the time of the transaction. Spot trades are the most common type of transaction and generate straightforward cost basis and gain/loss records.

Staking / Staking Rewards Staking is the process of locking up cryptocurrency to support the operations of a proof-of-stake blockchain network, in exchange for rewards. Staking rewards are generally treated as ordinary income at fair market value on the date received. NODE40 tracks staking income and provides a dedicated Solana Staking Summary report.

Token vs. Coin A "coin" is a cryptocurrency native to its own blockchain (e.g., BTC on Bitcoin, ETH on Ethereum). A "token" is a digital asset built on top of an existing blockchain using a smart contract standard (e.g., ERC-20 tokens on Ethereum, SPL tokens on Solana). Both are tracked as assets within NODE40.

Transaction Hash / Transaction ID A unique identifier assigned to every transaction recorded on a blockchain. Transaction hashes can be used to look up a transaction on a block explorer and are included in NODE40 reports for audit verification. You can search by transaction hash in NODE40's Timeline view.

UTXO (Unspent Transaction Output) The accounting model used by Bitcoin and similar blockchains. Each UTXO represents a discrete, spendable unit of Bitcoin with its own history. When Bitcoin is sent, specific UTXOs are "spent" as inputs and new UTXOs are created as outputs. NODE40 tracks Bitcoin UTXOs individually to ensure precise cost basis assignment.

Wallet Address A unique identifier — similar to an account number — associated with a user's holdings on a blockchain. Wallet addresses are used to send and receive digital assets and to connect on-chain data to NODE40 Balance.

Wrapped Token A token that represents another asset on a different blockchain or protocol, typically pegged 1:1 to the original asset (e.g., WBTC is wrapped Bitcoin on Ethereum; wETH is wrapped ETH). Wrapping and unwrapping tokens may be taxable events depending on how the transaction is structured.

xPub / yPub / zPub Extended public keys used by UTXO-based wallets (Bitcoin, Litecoin, etc.) to allow a third party — such as NODE40 — to view all transactions and balances associated with a wallet without the ability to spend funds. xPub is the standard format; yPub and zPub are used for certain SegWit wallet types. NODE40 supports all three formats for read-only portfolio tracking.