"You have a vacuum of guidance. It puts the taxpayer in a bad position. The IRS has not issued official guidelines on how to approach prediction markets."
"Prediction markets have been around for decades, but platforms like Kalshi and Polymarket have exploded in popularity, shifting the tax reporting question to something urgent."
"Some people are applying a statute governing tax reports on financial derivatives, while others treat their prediction market gains as gambling winnings or regular income."
Prediction markets have gained popularity, raising urgent tax reporting questions. With millions of users, the lack of IRS guidelines complicates tax obligations. Taxpayers face uncertainty on how to report gains, with options including treating them as gambling winnings or regular income. The situation is exacerbated by the significant trade volume in platforms like Kalshi, which saw over $12 billion in March. Accountants express concern over the lack of clarity, putting taxpayers at risk of non-compliance.
Read at WIRED
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