Platforms like Robinhood and Kalshi currently are not required to report prediction market transactions on Form 1099-B, or any other tax form. They may issue you a statement with all of your prediction market activity, it is up to the taxpayer to track their gains and losses and keep documentation.
As for how to enter your prediction market transactions, there is no consensus on how to treat those gains and losses for tax purposes. The IRS has not issued any guidance on the matter. There is agreement that they need to be reported, but not on how to do it for tax purposes. There are several possibilities:
- Treat them as a capital asset, like stocks and bonds, subject to rules regarding capital gains and losses.
- Treat them as gambling winnings or losses.
- Treat them as Section 1256 contracts.
You do need to report them but you will have to determine which method you should use. Once the IRS issues guidance you might need to amend your tax return accordingly.
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