TokenTax Can Now Import Ronin Wallet Data
For the last few weeks, I’ve been trying to import the transaction data from my Ronin wallets into cryptocurrency tax software so I can file my taxes. The deadline’s coming up in a few weeks. And now I’ve found a simple way to do it. It turns out that TokenTax has an integration with Ronin wallets now. So if you sign up for TokenTax you can just enter the address for your Ronin wallet and the software will import all of your transactions from the Ronin DEX automatically. This includes NFT transactions where axies are traded for WETH or vice versa. Filing taxes just got a lot easier for Axie Infinity players.
How the Ronin Import Works
The tax prep process isn’t completely automatic after you import the Ronin wallet records. The Ronin wallet integration is still a beta feature. The TokenTax software records every transaction, but it classifies them incorrectly because it splits each trade into a separate deposit and withdrawal. So you have to manually match each deposit up with each withdrawal and merge the records so they’re recorded correctly as trades. For example, if you bought an axie, the software would record it as a deposit of an axie and a withdrawal of wrapped ether (WETH). So you have to merge those entries together and replace them with an entry showing that you traded WETH for the axie.
If you transferred ETH to the Ronin Dex to buy WETH, you also have to manually adjust those transactions. They also show up as a deposit of ETH and a withdrawal of WETH, so you have to replace them with entries showing that you traded ETH for WETH. Those adjustments are simple to make, though, and the TokenTax support team helpfully explained how the process worked. Once all of the transactions were entered correctly, TokenTax displayed the correct tax basis for the trades and reported my capital gains for cryptocurrency correctly.
The process works the same way for other decentralized exchanges, so TokenTax can also automatically import the trade history for other exchanges that other cryptocurrency tax apps don’t support. You may still have to merge some entries together and modify a few entries, but that’s still much more convenient than adding every trade to a CSV and then formatting the CSV correctly for the tax software.
Why Ronin Support Matters
The Ronin wallet integration was a surprise to me because I didn’t see anything about it on the TokenTax website before I signed up. And I haven’t heard of that integration on other websites either. And it’s even less well known that TokenTax can automatically import transactions from other decentralized exchanges without a CSV. There are several other popular NFT games in addition to Axie Infinity and players who earn cryptocurrency by playing those games will also have to file taxes. Those players could save a lot of time by using TokenTax to prepare their taxes.
This integration is a big deal for TokenTax because it gives the company a significant advantage over other cryptocurrency tax software apps. After playing the game for about a month, I had 40 transactions to enter and it was much more convenient to click the import button instead of adding each one to a spreadsheet. But other players have been playing Axie Infinity for years and some of them have been breeding axies and managing large teams of scholars.
As a result, these players might have hundreds or even thousands of transactions to report in 2021 alone. And some players also earned tens of thousands of dollars, or more, by playing Axie Infinity, so they have significant tax bills and need to ensure that their tax records are correct. It might take several days to enter all of those transactions into spreadsheets individually. I wouldn’t be surprised if some managers hired freelancers to do it for them. Ronin wallets don’t provide downloadable transaction records, so if you can’t automatically import the transactions you have to look up each record yourself.
TokenTax also posted an article about Axie Infinity and its tax implications a few months ago. That’s not only a good way to get visitors from search engine traffic, it shows that the accountants (not just the programmers) at TokenTax are aware of the game and have looked into the tax reporting requirements for the game. That’s important because it’s unclear how to handle some of the in-game features, such as axie breeding.
Axies lose value when you breed them because they can only breed seven times, so breeding axies is more complicated than simply minting a new NFT. By breeding an axie, you would mint one new NFT at a cost of SLP and AXS, but the parent axies would lose value as well. Other tax apps let you record NFT minting transactions but may not handle less common situations such as axie breeding properly. I haven’t bred any Axies so I don’t know how TokenTax handles that process, but it is clear that they’ve looked into it because they wrote an article about it.
Ensuring Correct Records
TokenTax also supports Metamask, which is important because you need to report the entire transaction record for all of your trades. So you need the Metamask wallet address and the Ronin wallet address to file taxes correctly. Metamask doesn’t show up under its own name on the dashboard, but the dashboard does allow you to upload ETH wallet addresses. If you enter your Metamask address in the ETH wallet section, the software can extract the records from there.
Otherwise, TokenTax will report that your cryptocurrency has a cost basis of zero, and the software warns you about this. A cryptocurrency tax reporting app can’t assign a different cost basis unless it has your full trading history, and that requires uploading records from any cryptocurrency exchange or wallet that you’ve ever used.
Support for Ronin wallets is on-brand for TokenTax. The company’s positioning itself as a premium service that handles cryptocurrency tax issues that other apps can’t handle. Preparing Axie Infinity taxes with TokenTax will typically cost $199 for the Premium tier. The Basic TokenTax tier costs $65 and is meant for filers who only made a few trades on Coinbase. The Premium tier includes support for NFTs and multiple exchanges, and you’ll need those features to file taxes for Axie Infinity. The Pro tier is $799 and might be necessary for Axie players who were especially active or made frequent trades on other cryptocurrency exchanges. If you play less popular NFT games, you might also need to sign up for the Pro tier if the Premium tier doesn’t support the game you’re playing.
As for people who don’t plan to file taxes for Axie Infinity, the Ronin Dex was recently hacked and the hacker stole $625 million worth of ether. This might be the largest cryptocurrency hack ever. As a result of this hack, it’s likely that financial authorities in multiple countries will now be investigating the Ronin Dex and they’ll know which wallets held large amounts of cryptocurrency. The large size of this hack also shows why it’s important for cryptocurrency tax software to support Ronin wallets. Axie Infinity has a lot of players and they have invested a lot of money in their axies.
TokenTax can also file your taxes for you, not just your cryptocurrency taxes. They have CPAs on staff who are cryptocurrency experts, so this deal may be worthwhile for major investors, but I decided to file taxes with TurboTax because it’s less expensive. If you do that, you can create a CSV after you prepare your taxes on TokenTax and then upload the CSV to TurboTax. I did that and TurboTax was able to import the CSV with no problems.
TokenTax did a better job at importing my transaction records from Axie Infinity than I expected, and the import process was much easier than it was with other apps. It’s also likely that TokenTax can do the same thing for other Ethereum-based NFT games but this isn’t widely known. If you play NFT-based games or trade NFTs, TokenTax is worthwhile even though it’s relatively expensive because it greatly simplifies the process of preparing cryptocurrency taxes.