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How to Fill Out Form 6781 for Kalshi Trades
Form 6781 line by line for event contracts: what goes on line 1 with no 1099-B, where lines 8 and 9 go, and whether you need Parts II and III.
The WagerMints Team
Prediction-market tax research
October 20, 2026/5 min read
Form 6781 is the form for Section 1256 contracts, and Part I is the only part most traders need. You enter your gains and losses, including open positions marked at year-end. The form splits the net result into 40% short-term and 60% long-term for Schedule D. Whether event contracts qualify is disputed, so choose this method before you start.
What should you decide first?
- Are you using Section 1256? No IRS guidance says it applies to event contracts. Camuso and Mukherjee conclude it doesn’t, and White & Case argues it does. Both sides.
- Is your venue eligible? Kalshi and Polymarket US can make the argument. polymarket.com can’t.
- Do you have year-end prices? Open positions need a December 31 mark.
How do you fill out Part I?
This example has $12,000 of gains and $4,500 of losses, counting year-end marks. The figures are made up.
| Line | What it asks for | Example |
|---|---|---|
| Boxes A to D | Elections. Box D is the loss carryback. A to C are for mixed straddles | None checked |
| 1 | Each transaction: (a) identification, (b) loss, (c) gain | See below |
| 2 | Add columns (b) and (c) | ($4,500) and $12,000 |
| 3 | Net of line 2 | $7,500 |
| 4 | Form 1099-B adjustments for straddles or hedges | Blank |
| 5 | Lines 3 and 4 combined | $7,500 |
| 6 | Loss carried back. Skip it if line 5 is a gain | Skip |
| 7 | Lines 5 and 6 combined | $7,500 |
| 8 | 40% short-term, to Schedule D line 4 | $3,000 |
| 9 | 60% long-term, to Schedule D line 11 | $4,500 |
If line 5 is a loss and you check box D, line 6 is the amount you carry back. How the carryback works.
What goes on line 1 if you got no 1099-B?
The instructions cover both cases. If you received a Form 1099-B, you enter the amount from box 11, with “Form 1099-B” and the broker’s name in column (a). Otherwise they say:
“List separately each transaction for which you didn’t receive a Form 1099-B or substitute statement.”
Kalshi’s Documents page says it doesn’t report profits and losses to the IRS, so this is the usual case for Kalshi traders. Interactive Brokers users may be different, because ForecastEx trades appear on its consolidated 1099-B. Interactive Brokers details.
A busy year won’t fit on the form. The instructions don’t describe a summary shortcut for this line, so ask your preparer how to present it, such as totals on line 1 with an attached statement of every trade. Keep the full per-trade file with your return either way.
Do you need Parts II and III?
- Part II is for straddles, with a separate statement listing each straddle and its parts. Offsetting positions can bring you here, so ask a preparer if you hedge one market against another.
- Part III is a memo list of positions held at year-end whose value is above your adjusted cost. The instructions say not to complete it if you have no recognized loss on any position.
What goes wrong most often?
- Reporting the same trades on Form 8949 as well, which counts them twice.
- Leaving out open positions, since line 1 covers contracts open at year-end as well as closed ones.
- Forgetting the next year’s starting point, which is the December 31 mark and not your original cost.
- Including polymarket.com trades.
- Adding interest or rewards, which are separate income.
How does WagerMints help with Form 6781?
WagerMints prices your year under all four methods, so you can see what Section 1256 changes. Pro fills Part I with your total on one line and the 40% and 60% split, and your uploaded trade file is your transaction list. Show both to your preparer. Entering it in software? Steps for TurboTax, H&R Block and FreeTaxUSA.
Questions about Form 6781
Do I need Form 6781 for Kalshi?
Only if you report your Kalshi trades under Section 1256. If you use capital gains, ordinary income or gambling, you don't file it for those trades. Report the trades one way, not both.
What goes on line 1 of Form 6781?
Gains and losses from Section 1256 contracts closed during the year or open at the end of it. The instructions say to list separately each transaction for which you didn't receive a Form 1099-B. Kalshi says it doesn't report trading profit and loss, so this usually applies.
Where do Form 6781 lines 8 and 9 go?
Line 8, the 40% short-term part, goes on Schedule D line 4. Line 9, the 60% long-term part, goes on Schedule D line 11.
Do I fill out Part II of Form 6781?
Only for straddles. If you hold offsetting positions that reduce your risk, such as both sides of a related market, ask a preparer whether the straddle rules apply.
Can I use Form 6781 for polymarket.com?
No. polymarket.com isn't a qualified board or exchange, so its trades aren't Section 1256 contracts.
General information about US federal tax, not tax advice.
Sources
Run this against your own trades
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Run your reportFull guides: Kalshi taxes, Polymarket taxes, the four methods and the tax glossary. Or try the free prediction market tax calculator.
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