Accounting primitives of DeFi protocol events: A method for event-level characterisation under US crypto-asset tax rules

Working paper, version 0.1, 26 October 2026. US reporting infrastructure for digital assets is operational: Form 1099-DA reports gross proceeds for sales from 2025 and cost basis for covered assets from 2026. The rules that decide what a protocol interaction is for tax purposes have not followed. The 2024 regulations that would have imposed broker reporting on certain DeFi platforms were disapproved under the Congressional Review Act and removed from the Code of Federal Regulations in July 2025. Non-custodial users therefore have their exchange activity reported by third parties while their DeFi activity remains self-characterised and largely undocumented. The paper proposes a method for that characterisation. It takes the accounting event as the unit of analysis, argues that the facts determining legal character are visible in contract state transitions, and reduces the event space to ten accounting primitives. The facts are organised in a protocol event graph held in a graph database, with every fact record carrying a citation to the exact contract, function, and line. For three protocols (LI.FI, Uniswap, Pendle) it shows how these fact records answer the factual questions that tax characterisation depends on, and how those facts line up against the fields Form 1099-DA actually reports. It then sets out a four-part decision test intended to produce the same answer from two independent preparers. The paper is methodological. It does not resolve open questions of tax law and is not tax advice. It is an unpublished draft and has not been peer reviewed. The contract analysis and drafting involved AI tools; this is disclosed in Section 8.3.