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"QuickBooks for crypto" offering enterprise-grade transaction tracking for cryptocurrency tax compliance

  • NODE40 can read and evaluate activity from all of your cryptocurrency sources like wallets and exchanges, and provide a simple and clear summary for how to file your taxes.
  • Ability to examine blockchains activity that took place outside exchanges (on-chain tracking).
  • Patent-pending SMART Algorithm applies financial/IRS rules to movement within and between portfolios to focus on asset lifecycle and in particular, taxable activity.
  • Downloadable detailed and transparent audit records with tax forms to back up or explain your tax position to tax authorities or auditors.

Addressing the specific needs of an enormous market that has grown over 6x since 2015

  • Total addressable market of $1.6B.
  • In 2021, over 40M taxpayers will report owning or trading cryptocurrencies.
  • 53% of crypto users move from one to another, creating a $20 million market of tax liability.

Team with deep expertise in blockchain technology

  • Previously founded a masternode hosting and monitoring business.
  • 20 years of experience managing web-based services.
  • Expertise in blockchain hosting, blockchain accounting, and cost basis analysis.

Updates

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NODE40
February 18, 2021

NODE40 hosts a webinar about what to do when the IRS says you underpaid cryptocurrency taxes.


NODE40 co-founder Sean Ryan, Wendy Walker of Sovos Compliance, and moderator Ron Quaranta of the Wall Street Blockchain Alliance discuss how different corporate compliance efforts and a rapidly evolving cryptocurrency industry have outpaced the IRS guidance, leading to American taxpayers receiving notices like the CP2000 from the IRS of massive underreporting. Wendy and Sean explain how information reporting can trigger IRS attention, how improvements in corporate compliance can help all parties involved, and finally, how taxpayers can use their own trade data to produce defensible records that the IRS missed.


In 2021, over 40M taxpayers will report owning or trading cryptocurrencies

Currently available off-the-shelf solutions are wildly inaccurate and not auditable. With traditional investments, there are typically long-established financial statements made available on demand by your financial institution that make it pretty easy to determine your tax liability. This is unfortunately not the case for crypto investments.

With cryptocurrency, you are on your own, but not because online cryptocurrency exchanges don't care or don't want to provide the necessary financial statement. It is because they do not have the information to do so. 

When they do report activity, cryptocurrency exchanges will almost always report incorrect numbers to the IRS, due to the exchanges not knowing the cost basis of your asset as you move currency from one exchange to another. This is a technical problem, not a legal problem, and NODE40 Balance was built to solve it.

A “QuickBooks” for crypto

After generating significant business revenue from their own crypto advisory business, founders Perry Woodin and Sean Ryan needed a way to determine their own corporate tax liability from their cryptocurrency invoices. After an extensive evaluation of the limited platforms that already existed and a deep dive into IRS property law, Perry and Sean realized that they'd need to build a solution themselves.

NODE40 has removed the complicated barriers to enabling cryptocurrency tax compliance

NODE40 is an intuitive and transparent cryptocurrency tax platform that simplifies the increasing complexity of tracking on-blockchain and off-blockchain transactions—enabling financial professionals to be leaders in blockchain and cryptocurrency accounting and ensure proper compliance management. NODE40 aggregates transactions from multiple sources, assigns cost basis, simplifies tax filing preparations, and more with unprecedented speed, transparency, and accuracy.

NODE40 offers cost basis tracking for the cryptocurrency industry. It is an essential software-as-a-service (SaaS) platform for accountants and auditors—going beyond traditional audit and tax services to simplify blockchain compliance.

NODE40 is a freemium subscription model, with paid subscriptions starting at $75 with seasonal promotional offers. Additional features are included with tiered plans leading up to a la carte pricing for customers or organizations with sophisticated or portfolios.

NODE40 analyzes the raw cryptocurrency transactions so that customers don’t have worry about the complexity.

The raw transaction data is processed through NODE40’s proprietary algorithms and the customer is presented with a familiar ledger similar to a bank statement.

The processed transaction data can then be used to generates tax forms that customers can file directly with the IRS.

The data processed by NODE40 goes well beyond tax compliance. Our unique ability to track the actual transaction data provides insights into overall portfolio health, reports that support business accounting, and other compliance needs. 

Portfolio snapshot from a DeFi contract.

 

For customers requiring B2G reporting compliance, NODE40 works with industry experts to provide a full-service solution. 



With crypto assets on the rise, and increasing attention from the IRS, the timing couldn’t be better.



NODE40 plans to continue growth through a multi-modal market strategy

Channel Partners

  • U.S. regulated exchanges with requirements to provide tax reporting to their customers.
  • Foreign exchanges with both monthly reporting and annual reporting requirements.
  • Certified Public Accountant (CPA) firms. Starting with the 2019 tax season, CPAs are required to ask their customers about their cryptocurrency interaction. 2020 tax returns ask about cryptocurrency as a top line-item on Form 1040.

Models

Standard referrals

  • Custom referral link that is used for tracking signups.
  • Channel partners may receive a percentage of revenue. 

Integrated referrals

  • Channel partner with direct call to action on their platform. 

Subsidized referrals

  • Integrated referral and the channel partner subsidizes the cost for their customers to use NODE40.

Targeted Marketing

CPAs with customers who have:

  • Filed for extensions due to crypto.
  • Receive an IRS letter.

Individuals who have received a 1099 (1099-K, 1099-B, 1099-INT, 1099-MISC other) from a regulated exchange.

Individuals who have received IRS 6173 (response required) and 6174/6174-A letters as well as the CP2000 (known underreported income).

Organic Growth

  • Convert leads to paid users.
  • Customer word of mouth.

NODE40 fills in the critical gaps left by other services


Transparent
NODE40 provides an independently verifiable audit trail that shows exactly what transpired


Proven Precision
NODE40 provides automated identification of all transactions provides defensible, auditable data.

Full-featured
NODE40 brings order to what sometimes appears to be chaos, at a competitive price point.


Bookkeeping/Tax Platforms

It’s still early, but within the next few years, the established bookkeeping and tax platforms will need to support cryptocurrency transactions. Acquisition of an existing platform makes the most sense.

Cryptocurrency Exchanges

The top-tier U.S. based exchanges all need to provide tax compliance support for their users. Due to the technical nature of cryptocurrency, the only way to provide that support is through a third-party platform like NODE40. A strategic acquisition by an exchange would provide a value-add and build customer loyalty. In addition, an acquiring exchange would gain insight into how their customers interact on competing exchange platforms. NODE40 is currently in talks with 2 of the top 4 crypto exchanges.

Audit Firms

Firms that specialize in accounting and audit require tools to assign and track cost basis.

Banks

Office of the Comptroller of the Currency issued News Release 2020-98 granting federally chartered banks authority to provide cryptocurrency custody services for customers.


Issuer
NODE40, Inc.

Type of Offering
Regulation Crowdfunding

Offered By
Offered by NextSeed Securities, LLC

Offering Min

$200,000

Offering Max

$750,000

Min Individual Investment

$100

Raised to date

$185,600

Type of Securities Future Equity (SAFE)
Valuation Cap $5,000,000 (post-money)
Discount 20%
View the Issuer's SEC Form C filing


The founders have contributed around $1.1 million in capital since starting the company. The Issuer anticipates that the total cost needed for continued or expanded operations will be approximately $750,000. NODE40 is seeking to crowdfund an amount between the minimum of $200,000 and maximum of $750,000 through the Offering. The minimum of $200,000 will be for ongoing operations. If NODE40 is able to complete a successful Offering, the members of the Issuer have committed to provide or arrange for sufficient financing for the Issuer to cover the remaining balance of the cost to achieve company objectives. Please also see Section V –“Financial Statements” and Appendix A for more information.


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Perry Woodin
CEO

Perry's interest in blockchain technologies started with the financial incentives that digital currencies use to encourage network participation - from early Bitcoin mining to Dash incentivized full nodes. Perry comes to blockchain business development with over 20 years of experience in architecting and managing software applications and services.

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Sean Ryan
CTO

Sean designs NODE40's technology roadmap and plays an active role in business development activities. He oversees key service offerings including blockchain hosting, blockchain accounting, and cost basis analysis. He continues to spearhead technology initiatives in the blockchain space and works closely with strategic partners to deliver highly scalable and fault tolerant solutions.

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Mike Atwood
VP of Growth & Strategy

Mike comes to NODE40 with over 20 years experience in the financial services space, where he managed and developed products and services for large financial institutions and payment providers, and spent significant time working in China, Middle East, APAC, Europe and Russia/CIS. Most recently he worked at Sovos, a leader in tax and compliance software space, where he led the sales effort for their crypto tax reporting line of business to land exchanges like Paxos and Gemini.

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Christian B. Sullivan
Advisor

Christian got to know the platform organically as a customer of NODE40. Christian is a super angel and entrepreneur with multiple billion-dollar exits. His most recent role is as co-founder of Republic Labs where he's made deep connections with industry players.

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Suleyman "Suley" Duyar
Advisor

Known to friends as "Suley", Suleyman Duyar was an early implementer of semi-automated securities trading strategies. Currently, Mr. Duyar is the Chief Executive Officer of RenGen LLC, an investment firm that was one of the earliest investors in blockchain technology. Suley has been spearheading partnership talks between NODE40 and channel partners. 

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Dave Wojeski
Advisor

Dave Wojeski is the founder and Managing Director of Wojeski & Company CPAs, P.C. Prior to founding the firm, Dave worked for a "Big 4" accounting firm. Dave has substantial experience in advising closely held companies on strategic and tax planning, corporate structure, and merger, acquisition and equity related strategies.

🚩

5/1/2019

NODE40 upgrades crypto accounting software

🚩5/4/2019NODE40 - How to Report Cryptocurrency on Taxes

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7/23/2019
2019 Innovation Award Finalist

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8/26/2019
Crypto Taxes 2019 with Node40 + GREAT Crypto Tax Software
🚩

10/9/2019
NODE40 Becomes the First Consumer Cryptocurrency Tax Platform to Achieve SOC 1 Compliance
🚩

7/13/2020
NODE40 Balance Granted Patent Pending Status by US Patent and Trademark Office for its Industry Leading Tax Platform’s Cost Basis Tracking Process
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12/28/2020

NODE40 Balance releases international support with first translation to Brazilian Portuguese and 10 fiat currencies.
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01/01/2021

NODE40 joins the Wall Street Blockchain Alliance


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Brian
I've seen that EY also has a crypto tax software package. How is this different and/or better? Further, my background is in patent prosecution. I'd be curious to see how you've described and claimed your algorithm.
NODE40
ISSUER
Hi Brian, Thanks for the comment. I just posted a short video of the EY onboarding process for their CryptoPrep platform. https://youtu.be/Jes7z9z-WFA. What you’ll see in the video is that EY is quite limited in what it supports. NODE40 doesn’t have ...
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Issuer Statement

The information contained on this campaign page (the "Campaign Information") is furnished solely by the Issuer to prospective investors in the investment opportunity described herein. All Campaign Information is intended to be a summary of the terms and information contained in the Disclosure Statement and the Purchase Agreement, and is fully qualified by reference to those documents. In the event any Campaign Information conflicts with the terms of the Disclosure Statement or Purchase Agreement, the terms of those documents will control. The Issuer has provided the Campaign Information for inclusion on the website located at www.nextseed.com, and in no way will the Campaign Information be deemed to have been created or provided by NextSeed Securities, LLC, NextSeed Services, LLC, or their affiliates.