Tax Glossary

The original cost of an asset plus fees or commissions. Used to calculate gain or loss when a position closes.

Germany's flat 25% withholding tax on capital income, including interest, dividends, and capital gains from financial instruments.

The German tax form (annex) for declaring capital income, including gains from financial instruments and investments.

Finnish "earned income" category taxed at progressive rates up to ~44%. Prediction market gains may be classified here.

The annual Australian tax return filed with the ATO, where capital gains including prediction market profits must be reported.

Danish "share income" taxed at 27% (up to DKK 61,000) and 42% above. May apply if prediction markets are classified as financial instruments.

Dutch tax category for income from savings and investments, taxed on a deemed (fictitious) return rather than actual gains.

Luxembourg tax on speculative gains from assets sold within 6 months of acquisition. Beyond 6 months, gains are typically tax-free.

Profit from selling or settling an asset for more than your cost basis. Can be short-term or long-term.

Losses from settling or selling a position for less than your cost basis. Can offset gains and up to $3,000 of other income per year.

The U.S. federal agency that regulates futures markets. Kalshi is CFTC-regulated, which affects which tax methods are available.

The total amount paid to acquire a position, including purchase price and fees.

The portion of Canadian capital gains that is taxable — 50% for the first $250,000, increasing to 66.67% above that threshold.

Australia's 50% capital gains tax discount for assets held over 12 months. Halves the taxable portion of long-held prediction market positions.

Ireland's €1,270 annual exemption from Capital Gains Tax. The first €1,270 of gains each year is tax-free.

A CFTC-regulated exchange authorized to list futures and options. Kalshi is a DCM.

The event that closes a position — either a settlement or a sale. Triggers a taxable event.

Belgium's "miscellaneous income" category taxed at 33%, potentially applicable to speculative prediction market gains.

A binary contract that pays out based on whether a specific event occurs. Priced between $0 and $1.

Portugal's option to aggregate investment income with other income for progressive tax rates instead of the flat 28% rate.

The Swiss Federal Tax Administration (Eidgenössische Steuerverwaltung) — sets guidelines for professional trader classification.

Cost basis method where shares bought first are assumed sold first. The IRS default method.

Your tax filing category (Single, Married Filing Jointly, etc.) that determines tax brackets and deductions.

IRS form issued by brokers reporting proceeds from sales. Kalshi issues 1099-B forms to traders.

IRS form for Section 1256 contracts. Reports gains with the 60/40 long-term/short-term split.

IRS form listing each individual asset sale with dates, proceeds, cost basis, and gain/loss.

The deemed (fictional) investment return that the Dutch government taxes under Box 3, regardless of actual gains or losses.

Tax method where gross winnings are taxable and losses only deductible if you itemize. One of four methods for prediction markets.

Total proceeds from all winning positions before subtracting losses. Key for the gambling income method.

UK tax law exempts gambling winnings from income and capital gains tax. May apply to prediction market profits depending on classification.

Time between buying and selling/settling a position. Determines short-term vs. long-term capital gains rates.

The Dutch tax-free threshold for Box 3 assets — €57,000 per person (€114,000 for tax partners) in 2025.

Individual deductions on Schedule A instead of the standard deduction. Required to deduct gambling losses.

Swedish "income from capital" category taxed at a flat 30%. Covers capital gains, interest, and dividends.

Italy's 26% substitute tax on capital gains from financial instruments, applied in lieu of progressive income tax rates.

German church tax (8–9%) levied on top of income tax for registered members of qualifying religious communities.

Danish "capital income" category covering interest, certain gains, and potentially prediction market profits. Taxed at up to ~42%.

Gains on assets held over one year, taxed at preferential rates of 0%, 15%, or 20%.

Excess capital losses that carry to future tax years when they exceed the $3,000 annual deduction limit.

The tax rate on your last dollar of income. Prediction market profits are taxed at this rate for most methods.

Treating open positions as if sold at year-end fair value. Required for Section 1256 contracts.

Total proceeds minus total cost basis across all closed positions. Your bottom-line trading result.

Tax method where net P&L is reported on Schedule 1 at your marginal rate. The most conservative approach.

Finland's online tax portal for filing returns, viewing tax decisions, and reporting investment income including prediction market gains.

A group of trades in the same market and direction. Closed by settlement or sale.

A marketplace where participants trade contracts on the outcomes of future events, priced by probability.

The amount received when a position is closed. $1/share for winning bets, $0 for losing, or the sale price.

Swiss classification that determines if trading profits are tax-free (private) or taxable as self-employment income (professional).

Italian tax form for declaring foreign financial assets and investments held outside Italy, including prediction market platform balances.

Spanish "savings income" tax rates (19–28%) applied to capital gains, dividends, and interest — including prediction market profits.

IRS form that summarizes capital gains and losses from Form 8949. Calculates net gain/loss and the $3,000 deduction.

Tax code provision giving regulated futures a 60% long-term / 40% short-term split regardless of holding period.

When a prediction market resolves and pays out. YES pays $1 if event occurs, $0 if not.

Gains on assets held one year or less. Taxed at ordinary income rates (10%–37%).

A flat deduction amount ($14,600 single / $29,200 married in 2024) that reduces taxable income.

Germany's €1,000 annual tax-free allowance for investment income (€2,000 for married couples filing jointly).

Germany's 5.5% solidarity surcharge on income tax. Still applies to capital gains under Abgeltungsteuer.

The CRA tax form for reporting capital gains and losses in Canada, used to report prediction market dispositions.

Norwegian "shielding deduction" that exempts a risk-free return on investments from taxation, reducing effective capital gains tax.

The percentage rate at which a portion of your income is taxed. The U.S. has seven brackets from 10% to 37%.

The 12-month period (Jan 1 – Dec 31) for which you file a return. Disposition date determines the year.

IRS rule disallowing loss deductions if you rebuy a substantially identical security within 30 days.