Reporting Requirements
How to report company equity sales and maintain good standing in the Network
Overview
If you have shareholders in your personal token, you must report equity sales in companies (not personal tokens) to ensure proper dividend distribution. This maintains transparency and trust within the Network.
If you don’t have shareholders, there’s no need to report company equity sales.
When Reporting is Required
Personal Token Sales
- No reporting needed - automatically handled by the Network
- Instant calculation and distribution of dividends
- Complete transparency for all parties
Company Equity Sales
- Annual reporting required if you have shareholders
- Must be completed by the US tax deadline
- Covers all company equity sales during the tax year
- Ensures proper dividend distribution to shareholders
Annual Reporting Process
Reporting Timeline
- Annual deadline: US tax deadline (typically April 15)
- Grace period: Usually a brief extension period available
- Early reporting encouraged: Submit as soon as transactions are complete
Required Information
For each company equity sale, you must provide:
- Company name and details
- Sale date and transaction details
- Number of shares sold
- Original purchase price and date
- Sale price and proceeds
- Capital gains calculation
Gather Documentation
Collect transaction records, purchase agreements, and tax forms
Access Reporting Interface
Use the Network’s simple reporting dashboard
Enter Transaction Details
Input sale information for each company equity transaction
Calculate Capital Gains
Network automatically computes gains and dividend amounts
Deposit Dividend Funds
Transfer required dividend amount to your personal token wallet
Complete Distribution
Network automatically distributes dividends to shareholders
Simplified Reporting Interface
The Network provides user-friendly tools to minimize reporting burden:
Basic Information Entry
Most users can complete reporting in minutes by providing:
- Transaction summary - High-level details of each sale
- Purchase and sale prices - For capital gains calculation
- Supporting documents - Upload relevant forms and records
Automatic Calculations
- Capital gains computation - Network calculates profits automatically
- Dividend allocation - Proportional distribution to shareholders
- Tax form integration - Compatible with standard tax preparation
Document Upload
Upload standard documents you’re already preparing:
- Brokerage statements showing transactions
- Tax forms (1099-B, Schedule D, etc.)
- Purchase/sale agreements for private transactions
- Corporate action notices for complex transactions
The Network’s interface is designed to work with documents you’re already creating for tax purposes, minimizing additional work.
Future Automation Features
The Network is actively developing integrations to automate reporting:
Platform Integrations
- Equity management platforms (Carta, Pulley, etc.)
- Investment services (Schwab, Fidelity, etc.)
- Tax preparation software (TurboTax, H&R Block, etc.)
- Corporate systems for direct transaction feeds
Automatic Import
When available, these integrations will:
- Import transactions automatically from connected platforms
- Pre-populate reporting forms with accurate data
- Reduce manual data entry to minimal verification
- Ensure reporting completeness and accuracy
Reputation System
The Network maintains a comprehensive reputation score based on your reporting behavior:
Reputation Factors
Reporting Accuracy:
- Correct information and calculations
- Proper documentation and supporting materials
- Consistency with external records
Timeliness:
- Meeting annual reporting deadlines
- Prompt submission when transactions occur
- Advance notice to shareholders when possible
Consistency:
- Reliable track record over multiple years
- Predictable reporting patterns
- Minimal discrepancies or corrections
Transparency:
- Open communication with shareholders
- Proactive updates about material transactions
- Clear explanations of complex transactions
Reputation Impact
Your reputation score affects:
- Investor confidence - Visible on your personal token profile
- Fundraising success - Higher reputation attracts better investors
- Investment opportunities - Other token owners consider your reputation
- Network standing - Influences your position in the ecosystem
- Secondary market pricing - May affect demand for your shares
Significant discrepancies or delays in reporting may negatively affect your reputation score and Network standing.
Verification and Compliance
Document Verification
For larger transactions, the Network may require additional verification:
- Third-party confirmation of transaction details
- Supporting documentation review
- Cross-reference checking with external sources
- Professional verification for complex transactions
Escrow Mechanism
- Temporary holding of a small percentage of distributed funds
- Release upon verification completion
- Dispute resolution process for discrepancies
- Timeline guarantees for verification completion
Compliance Features
- Audit trail maintenance for all transactions
- Regulatory compliance with securities laws
- Tax reporting assistance and integration
- Legal framework protection for all parties
Best Practices
Maintaining Good Standing
Proactive Communication:
- Notify shareholders of upcoming major transactions
- Provide context and reasoning for investment decisions
- Share regular updates on portfolio performance
- Address questions and concerns promptly
Accurate Record Keeping:
- Maintain detailed transaction records throughout the year
- Organize documents for easy reporting access
- Use consistent accounting methods and calculations
- Backup important documents and data
Timely Reporting:
- Don’t wait until the deadline to begin reporting
- Submit reports as transactions are completed
- Use early reporting to identify and resolve issues
- Plan ahead for complex or large transactions
Handling Complex Transactions
Multi-step sales (earnouts, staged closings):
- Report initial transaction with estimated values
- Update with actual proceeds as received
- Provide clear explanations to shareholders
Equity swaps and reorganizations:
- Consult with tax professionals for proper treatment
- Document the economic substance of transactions
- Ensure shareholders understand the impact
International transactions:
- Consider currency conversion and timing
- Understand tax implications in relevant jurisdictions
- Provide additional documentation as needed
Support and Resources
Network Support
- Help documentation and tutorials
- Live support during reporting periods
- Professional consultation for complex situations
- Community forums for peer assistance
Professional Services
- Tax professional network for consultation
- Legal advisory services for complex transactions
- Accounting support for record keeping
- Integration assistance for automated reporting
The Network is committed to making reporting as simple and automated as possible while maintaining transparency and trust.
Example Reporting Scenario
Let’s walk through a typical annual reporting process:
Year-End Review
You sold equity in two companies during the tax year Company A: 120k sale = 25k purchase → 5k gain Total capital gains: $75k
Document Preparation
Gather brokerage statements, tax forms, and transaction records Review purchase dates and prices for accuracy
Network Reporting
Log into reporting interface before tax deadline Enter transaction details for both companies Upload supporting documentation
Automatic Calculation
Network calculates 60k - Shareholders (20%): $15k
Fund Deposit
Transfer $15k to personal token wallet for distribution Network automatically distributes to shareholders
Completion
Receive confirmation of successful reporting Reputation score updated positively Shareholders receive dividend payments