Prediction Market CPA for Kalshi, Polymarket, and Event Contract Traders
Licensed prediction market tax accountants who reconcile every trade, choose a defensible treatment, and file returns that hold up. We rebuild records the platforms never gave you through our digital asset reconciliation team, then prepare your federal and state returns.
A prediction market CPA handles tax reporting for event contract trading on platforms like Kalshi, Polymarket, and Robinhood. Because the IRS has not issued guidance on how these contracts are taxed, the work involves choosing and documenting a defensible treatment, rebuilding trade-level records the platforms do not provide, and filing a return that holds up if questioned. COS Elite provides this as a fixed-fee service led by a licensed CPA and an IRS Enrolled Agent, with returns from $999 to $3,000 depending on your trading volume.
Why prediction market taxes need a specialist.
Prediction markets are new enough that the tax rules have not caught up. The full background lives in our guide to how prediction markets are taxed. The short version: three separate problems stack on top of each other, and a standard tax preparer is not set up to handle any of them.
Four Possible Tax Treatments, Zero Official Guidance
Event contract profits could plausibly be taxed under Section 1256, as capital gains, as ordinary income, or as gambling winnings under Section 165(d). The IRS has not said which applies, and each one produces a different tax bill. Someone has to choose a treatment, support it, and put it in writing before your return is filed.
Platform Statements Do Not Match Any of Them
Kalshi issues 1099s covering rewards and interest, not your trading results. Polymarket sends nothing at all. Robinhood produces a custom annual statement that is not a 1099-B. None of these documents can be copied onto a tax return as-is, so accurate filing means rebuilding your actual profit and loss from raw trade data.
The 90% Loss Cap Can Create Tax in a Breakeven Year
Under the One Big Beautiful Bill Act, gambling losses are only deductible up to 90% of winnings starting in 2026. If your activity is treated as gambling, you can break even for the year and still owe real tax. Whether that cap applies to you depends entirely on how your contracts are characterized, which is exactly the decision most preparers never make deliberately.
The stakes compound if a return already went out the door with these numbers wrong. An amended filing done carefully can fix it, and an IRS letter answered badly can make it worse, which is why our IRS notice response team sits inside the same firm as the people rebuilding your trade data.
What does a prediction market CPA actually do?
Six concrete deliverables, from the first data pull to the filed return. Nothing on this list is optional, because skipping any one of them is how prediction market returns go wrong.
Characterization analysis with written rationale
We evaluate Section 1256, capital gain, ordinary income, and gambling treatment against your actual contracts and holding patterns, then document why the chosen treatment fits. You get the reasoning on paper, not just a number on a form.
Trade-level reconciliation across every platform and wallet
Exchange exports, on-chain records, and platform statements get merged into one clean ledger of every position, settlement, and fee. This is the same reconciliation work our team does for crypto portfolios with thousands of transactions.
Crypto funding and settlement treatment
Funding a trading account with BTC or USDC is itself a taxable disposal, and most traders miss it. We capture the gain or loss on every crypto deposit and withdrawal, not just the contract trades.
Federal and state return preparation and filing
The complete return, prepared and filed electronically. State treatment of event contract income does not always follow federal, and we handle both sides in every engagement.
Written position documentation for material accounts
For larger accounts, we prepare a standalone memo laying out the treatment, the authority it rests on, and the records supporting it. If your return is ever questioned, the defense already exists.
Post-filing and audit support
If the IRS sends a letter, you are not starting over with someone new. Our IRS notice response team handles the correspondence with your full trade history already in hand.
Every platform we cover.
Most firms in this space stop at Kalshi and Polymarket. Traders do not. If you hold positions on a platform below, we already know what its statements leave out.
Kalshi
The largest regulated event contract exchange in the US. Kalshi issues 1099s for rewards and interest but not for your trading profit and loss, and its trade exports price contracts in cents, a unit mismatch that quietly corrupts spreadsheets. We rebuild true P&L from the raw fills. Read the Kalshi taxes guide.
Polymarket
Trades settle in USDC on Polygon and no 1099 is issued, but every position is still reportable, and so is the crypto used to fund it. We reconstruct complete histories from on-chain wallet data. Read the Polymarket taxes guide.
Robinhood Event Contracts
Robinhood reports this activity on a nonstandard Event Contracts Annual Statement, not a 1099-B, and the figures cannot go on a return without translation. We map that statement line by line to the treatment your return actually uses.
ForecastEx / IBKR ForecastTrader
Interactive Brokers routes event contracts through its ForecastEx exchange, with incentive coupons that have their own income character. We handle the contracts and the coupons together.
PredictIt
The long-running political market operates under a distinct structure with its own fee model and withdrawal mechanics. Legacy PredictIt accounts often carry years of unreconciled history, and we rebuild it.
Crypto.com Sports Contracts
Sports event contracts from a crypto exchange mix two reporting regimes in one account. We separate the contract activity from the crypto activity and report each correctly.
Underdog
As fantasy operators add prediction market products, the tax character of each product line differs. We track which bucket every dollar came from.
Hyperliquid
On-chain prediction and perpetual markets with no reporting at all. Everything comes from chain data, which is exactly the reconstruction work our reconciliation team does daily.
Trading somewhere newer than this list? New event contract venues launch constantly, and they all share the same underlying problem: incomplete records and an unsettled tax character. If we have not seen your platform yet, the reconciliation approach still applies, and we will tell you on the intake call exactly how we would handle it.
Five steps from raw trades to a filed return.
No scare tactics and no mystery. This is the same process every client goes through, whether you traded ten contracts on Kalshi or run a fund across five platforms. You always know which step you are on, what we found, and what happens next.
Intake Call
A short call to review your platforms, volume, funding sources, and any prior filings. You leave knowing exactly what your situation involves and what it will cost, quoted as a fixed fee in writing.
Data Collection & Reconciliation
Our Count On Sheep reconciliation team pulls exchange exports, platform statements, and on-chain records, then merges them into one verified ledger of every trade, settlement, deposit, and fee.
Characterization Decision
We analyze your contracts against the possible treatments, choose the one your facts support, and document the reasoning in writing. This decision drives everything else on the return.
Return Preparation & Filing
Federal and state returns prepared from the reconciled ledger and the documented position, reviewed by both a CPA and an Enrolled Agent, then filed electronically.
Post-Filing Support
Your records and position memo stay on file. If the IRS ever asks a question, we answer it with the documentation already built, and our notice response team steps in if needed.
How much does a prediction market CPA cost?
Most firms in this niche will not tell you what anything costs until you are on a sales call. We publish our starting prices because you should be able to budget for this before you talk to anyone. Every engagement gets a fixed fee in writing before any work begins, and the fee does not move once quoted.
Prediction Market Return
Complete federal and state return for a trader with a manageable trade history on one platform. Includes trade reconciliation, characterization analysis with written rationale, and electronic filing. Fixed fee quoted after your intake call.
Full Reconciliation Engagement
For traders with heavy transaction volume, multiple platforms, or on-chain activity to reconstruct. Adds wallet-level reconciliation, crypto funding treatment, and a written position memo for material accounts.
Entity & Fund Engagements
LLCs, funds, and six-figure-volume accounts get a scoped proposal covering entity-level reporting, ongoing advisory, and quarterly estimated tax planning. Priced in writing before work begins.
What moves the price is data, not drama: how many platforms you trade, whether on-chain reconstruction is needed, how many thousands of fills have to be reconciled, and whether an entity return is involved. A single Kalshi account with clean exports sits at the bottom of the range. Three platforms, two wallets, and a partnership return sit higher. Either way you see the number before we start, not after.
Not sure where you land? A $499 strategy session maps your situation before you commit to anything.
Sound like your situation?
We work with individual traders, entities, and funds across all 50 states. The common thread is real money on platforms whose paperwork was never designed for a tax return.
The Active Kalshi or Polymarket Trader
You trade event contracts weekly, your volume is well past hobby territory, and the forms your platform sent do not come close to describing what actually happened in your account. You need the real numbers rebuilt and a treatment you can stand behind.
The Brokerage Event Contract User
You trade event contracts through Robinhood or IBKR ForecastTrader alongside stocks and options. The event contract statement looks nothing like the rest of your brokerage paperwork, and your regular preparer has never seen one before.
The Crypto Trader Who Crossed Over
Your prediction market activity runs through USDC wallets, and it sits on top of an already complicated crypto tax picture. You need one team that can reconcile both worlds in the same engagement, not two firms pointing at each other.
The Entity, Fund, or Worried Filer
You trade through an LLC or fund, or you already filed a return you suspect handled this wrong. Either way the stakes are higher now, and the fix starts with an honest review of what was reported and what should have been.
A trader with roughly $600,000 in annual Kalshi volume, a Polymarket wallet funded with USDC, and a Robinhood event contract account brings us three data sources that disagree with each other and no usable 1099 for any of them. We reconcile about 4,000 fills and settlements into one ledger, capture the taxable USDC movements the trader did not know counted, run the characterization analysis, and file federal plus state returns backed by a written position memo. Total time from intake to filing: two to three weeks, at a fee fixed on day one.
Entity structuring and trader tax status.
Filing this year is the floor. If prediction markets are a serious part of your income, the structure you trade under matters as much as the return itself.
Entity structuring for high-volume traders
Past a certain volume, trading through an LLC or S corporation can change your self-employment tax exposure, retirement contribution room, and liability picture. It is not right for everyone, and forming an entity for the wrong reasons creates cost without benefit. We run the numbers on your actual activity first. Explore entity structuring.
Trader tax status, honestly assessed
Trader tax status gets pitched as a cure-all, but its tests were built around securities traders and its benefits map unevenly onto event contracts. We tell you what it would and would not do for your situation before you chase it.
Estimated taxes after a big win year
A large settlement in March creates a tax payment due long before next April. We calculate safe harbor payments so a winning year does not end with underpayment penalties stacked on top of the tax. See estimated tax planning.
Meet the team behind your filing.
Two licensed professionals touch every return, backed by the Count On Sheep reconciliation team that handles the data work. That team reconciles crypto and event contract activity every day of the year, which is why we can rebuild a Polymarket wallet or a Kalshi export in-house instead of outsourcing the hard part. Full backgrounds are on our about page.
Garrett Taylor, CPA
California CPA License #133092
Garrett is a former Big Four CPA who has spent his career on digital assets and derivatives, from thousand-wallet DeFi reconciliations to positions on instruments the IRS has not written rules for yet. He personally signs off on the characterization analysis behind every prediction market return the firm files.
Leanne Grant, EA
IRS Enrolled Agent #00167954-EA
Leanne is a federally licensed Enrolled Agent who reviews every return before it goes out and represents clients directly before the IRS. Her review is why a documented position on this page is not just a promise, it is a second licensed set of eyes on your filing.
Last reviewed July 9, 2026 by Garrett Taylor, CPA (California License #133092)
Prediction market CPA questions, answered.
Straight answers to what traders actually ask us, including the one nobody else will put in writing: what it costs.