Form 8949

IRS Form 8949, "Sales and Other Dispositions of Capital Assets," is where you report every individual trade when treating prediction market positions as capital assets. Each closed position gets its own line.

What goes on Form 8949

For each position, you report:

• Description: Market name (e.g., "YES — Will Bitcoin hit $100K?")
• Date acquired: When you bought the shares
• Date sold or disposed: When the market settled or you sold
• Proceeds: What you received ($1.00/share if won, $0 if lost, or sale price)
• Cost basis: What you paid including fees
• Gain or loss: Proceeds minus cost basis

Part I vs. Part II

Part I is for short-term transactions (held one year or less). Since most prediction market contracts settle quickly, the majority of your trades go here.

Part II is for long-term transactions (held more than one year). Rare for prediction markets but possible for long-dated contracts.

Handling many trades

If you have dozens or hundreds of positions, you can attach a statement with the same columns as Form 8949 and enter the totals on the form itself. This is what predictiontaxes.com generates — a Form 8949 statement with all positions listed.

Results flow to Schedule D

The totals from Form 8949 (total proceeds, total cost basis, total gain/loss) are transferred to Schedule D, which calculates your overall capital gain or loss for the year.