EventBasis / tax guides

Kalshi Taxes (TY2026) — what actually gets reported, and the four ways to characterize P&L

Kalshi issues no comprehensive 1099-B for event-contract P&L, exports are denominated in cents, and the right characterization is an open question. The TY2026 facts, sourced. Updated 2026-06-11 · TY2026 parameters.

What Kalshi actually sends you (and the IRS)

Kalshi issues NO comprehensive 1099-B for event-contract P&L (only 1099-INT ≥$10, 1099-MISC ≥$600 for credits, 1099-B for crypto transfers, 1099-DA via ZeroHash). Transaction exports are denominated in CENTS. (Kalshi Help, updated Mar 20, 2026.)

Two practical consequences. First, nobody computes your event-contract P&L for you — you (or your software) build it from the transaction export. Second, that export prices everything in cents: a fill shown as 93 is $0.93. Tools that read it as dollars overstate basis 100×. EventBasis detects the cents convention automatically and our test suite reconciles every demo fee against Kalshi's published schedule.

The four open characterizations

No IRS guidance exists for CFTC event contracts as of June 2026 — practitioners take one of four positions, with materially different outcomes:

Characterization	Position	What it means
§1256 (60/40)	Aggressive / unsettled	60% long-term + 40% short-term capital treatment regardless of holding period, mark-to-market at year end, Form 6781. Argued because Kalshi is a CFTC-designated exchange — but §1256(b)(2)(B) excludes 'swaps,' and the CFTC classifies event contracts as swaps. No IRS guidance, no PLR, no cases as of June 2026.
Capital gain/loss	Moderate / common	Contracts as capital assets under §§1001/1221 → Form 8949/Schedule D; almost always short-term in practice (taxed at ordinary rates). Net capital losses limited to $3,000/yr against ordinary income, with carryforward.
Ordinary income	Conservative / most common	Net profits as other income at ordinary rates (Schedule 1). The position most practitioners default to absent guidance.
Gambling (OBBBA)	Adverse under OBBBA	Winnings as gambling income; losses deductible only if itemizing, capped at min(90% × losses, winnings) — the TY2026 'phantom income' trap. Several states disallow losses entirely.

The §1256 question is the live one for Kalshi specifically: it IS a CFTC-designated contract market, but §1256(b)(2)(B) excludes "swaps," and the CFTC classifies event contracts as swaps. Aggressive filers claim 60/40; conservative filers report ordinary income. EventBasis shows you the dollar difference for your actual numbers.

The OBBBA trap (new for TY2026)

If your P&L is characterized as gambling, the One Big Beautiful Bill Act caps deductible losses at min(90% × losses, winnings), itemization required, no carryforward — effective Tax years beginning after Dec 31, 2025 (i.e., TY2026). A trader with $100,000 of winnings and $100,000 of losses — a break-even year — deducts only $90,000 and owes tax on $10,000 of phantom income. FAIR BET Act stalled in House Ways & Means as of Jan 2026 — 90% rule is current law.

States are not a footnote

New Jersey nets wins against losses on NJ-1040 with no itemizing (it did not adopt the federal 90% cap). Massachusetts taxes gross winnings under gambling characterization — losses count only at MA-licensed gaming establishments, which a federally-regulated exchange is not. 10 states (CT, IL, IN, KS, LA, NC, OH, RI, VT, WI) allow no gambling-loss deduction at all. EventBasis carries the full 50-state + DC table.

Deadlines that bite

No 1099 means no withholding — profitable traders generally owe quarterly estimates. Q3 2026 is due September 15, 2026 (covering June 1 – Aug 31 — World Cup season). Safe harbor: No penalty if timely payments ≥ the lesser of 90% of 2026 tax or 100% of 2025 tax (110% if 2025 AGI > $150k).

Run your own numbers — free

EventBasis computes your federal + state liability under all four characterizations side by side, flags the OBBBA phantom-income trap, and turns venue CSV exports into lot-level Form 6781/8949 drafts. Free during early access.

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Get the TY2026 filing checklist + updates when guidance moves (it will):

Primary sources

Verification-log discipline: every parameter on this page traces to one of these documents, checked 2026-06-11.

Educational information under stated assumptions, current as of 2026-06-11 — not tax advice. Characterization of event-contract P&L is unsettled (no IRS guidance, no PLR, no cases as of June 2026); engage a qualified professional before filing. Sources and parameters: methodology · primary documents linked below.

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