Schedule D

Schedule D, "Capital Gains and Losses," is the IRS form that summarizes your total capital gains and losses for the year. It receives data from Form 8949 and calculates your overall capital gain or loss.

How it works

1. Form 8949 lists each individual position (date, proceeds, cost basis, gain/loss)
2. Schedule D aggregates the totals: total short-term gains/losses and total long-term gains/losses
3. Net capital gain → taxed at applicable rates
4. Net capital loss → up to $3,000 deducted against other income, rest carries forward

Key lines for prediction market traders

• Line 7: Net short-term capital gain or loss (most prediction market trades end up here)
• Line 15: Net long-term capital gain or loss
• Line 16: Combined net gain or loss
• Line 21: If net loss, the deductible amount (up to $3,000)

When Schedule D is required

You need Schedule D when treating prediction market positions as capital assets. If using ordinary income or gambling methods, Schedule D is not required for the prediction market income (though you may still need it for other investments).