Realize Crypto Gains, Without Triggering Taxable Events

Disclaimer: In most tax jurisdictions, selling crypto assets for another asset such as cash (fiat currencies) or a different crypto, is considered a taxable event. If the seller had unrealized-gains on the crypto that was sold, it is likely that the seller will be subject to capital gains tax. On the other hand, borrowing crypto is not considered to be a taxable event, just like taking a loan out from a bank is not. At a technical level, the user of Tax Heaven is submitting collateral to the protocol and taking out a crypto loan. The loan has to be paid back for the user to retrieve their collateral. Tax Heaven is not providing any tax or financial advice and the content on this website should not be considered as such. Consult your tax, financial or legal advisor before using Tax Heaven.

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TVL

Selling crypto is a taxable-event, borrowing is not

Lend your BNB, BEP-20 token, or a token you purchased and have stored on binance and borrow the same token.

All loans are interest free and the collateral factor always stays constant.

Take out 99.5% of the value you put up as collateral.

Only 0.5% fee to use the Tax Heaven protocol!

Do whatever you want with the borrowed tokens

Do you want to trade BNB for Bitcoin but don’t want to trigger a taxable-event? Then use the Tax Heaven protocol (on Binance Smart Chain) to borrow BNB against your BNB collateral. The borrowed BNB can be used to buy Bitcoin!

So if the collateral factor always stays constant, and the loans are interest free, does one have to pay back the loan??? (Ask no further!)

Stake the Tax-BSC token and receive dividends in various tokens

“TAX-BSC” is Tax Heaven on Binanc Smart Chain’s native token.

The 0.5% fee that is charged when using the Tax Heaven protocol is distributed to people staking the TAX-BSC token.

The TAX-BSC token is distributed to depositors of “whitelisted tokens”.

The amount of TAX-BSC tokens that the depositors receive is based on the value of the token (determined using Chainlink price feeds) that is being deposited to the protocol.

Caution: The TAX-BSC token on Binance Smart Chain and the TAX token on Ethereum are completely different tokens. They reside on different blockchains and have no compatibility.

Terms of Loan

Loans are open-ended with no fixed repayment schedules.
Loans are subject to an origination fee equal to 0.5% of the loan balance. Loan origination fee is fully earned and will be deducted from the loan proceeds at the inception of the loan.
The current interest rate is 0% per annum on the outstanding principal amount of the loan.
The loan collateral factor is set at 100%. Exceeding the collateral factor will result in netting of the collateral and loan at the protocol level.
For valuable consideration, borrower pledges, assigns, transfers and delivers a continuing and unconditional security interest in all of the borrower’s present and future rights, title and interest in the loan collateral as security for the payment and performance of the loan. The security interest in the collateral shall remain in effect for so long as any loans remain outstanding.
Borrower agrees that if the loan amount and any accrued interest thereon is not repaid in full, the loan collateral may be liquidated in whole or in part.

Accounting

Accounting Entries by the Borrower (Illustrative Example)

When depositing 10 BNB collateral to the protocol and paying 0.05 BNB (0.5%) in fees

Debit Account	Debit Amount	Credit Account	Credit Amount
Deposit (Asset)	9.95 BNB	BNB (Asset)	10 BNB
Fee (Expense)	0.05 BNB

There should also be a journal entry to account for the TAX-BSC token that is distributed to the user when assets are deposited to the protocol. This should be a taxable event in most jurisdictions.

When borrowing 9.95 BNB from the protocol and paying 0.05 BNB in fees

Debit Account	Debit Amount	Credit Account	Credit Amount
BNB (Asset)	9.95 BNB	Loan (Liability)	9.95 BNB

When selling the borrowed 9.95 BNB for 0.3 BTC

Debit Account	Debit Amount	Credit Account	Credit Amount
BTC (Asset)	0.3 BTC	BNB (Asset)	9.95 BNB

Note: If the price of BNB in fiat terms increases between the time the loan is taken out and when BNB is sold for BTC, this could lead to a taxable event resulting in capital gain taxes.

When repaying the borrowed 9.95 BNB and retrieving collateral

Debit Account	Debit Amount	Credit Account	Credit Amount
Loan (Liability)	9.95 BNB	BNB (Asset)	9.95 BNB
BNB (Asset)	9.95 BNB	Deposit (Asset)	9.95 BNB