MarketPR
The Internal Revenue Service has not issued guidance on how winnings from prediction markets should be reported or taxed, leaving participants without a federal framework for calculating what they owe.
Tax practitioners say the absence of formal rules creates genuine ambiguity about how to report gains and how much to pay.
The classification problem Prediction markets let participants take positions on the outcome of future events and collect payouts when correct.
The IRS has not said whether those payouts constitute ordinary income, capital gains, gambling winnings, or some other category. Each carries its own reporting requirements and its own rate.
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