Frequently asked questions
Plain-language answers about the product and how prediction market gains are treated for tax purposes.
What does FileMyFills calculate?
It computes realized capital gains and losses from your prediction market trades using the FIFO (first-in, first-out) cost-basis method. Only trades that closed during the selected tax year are included. Open or unsettled positions are excluded.
Is this tax advice?
No. FileMyFills produces informational output only. The report is a starting point — not a substitute for a qualified tax professional. Your situation may involve state taxes, wash-sale rules, or other factors we don't model.
What are the three tax treatment options for prediction market income?
There are roughly three positions tax practitioners argue for: (1) ordinary income treatment, similar to gambling; (2) short-term capital gains; (3) Section 1256 contract treatment, which uses a 60/40 long/short split. The IRS has not issued clear guidance on prediction markets specifically. FileMyFills v1 computes capital gains treatment only. The three-way comparison is coming in a future release. Consult a CPA about which treatment applies to you.
Does this cover state taxes?
No. This report covers federal tax treatment only. State rules vary significantly. Your CPA can apply the federal gain/loss figures to your state return.
What about wash-sale rules?
Wash-sale rules (IRC § 1091) apply to securities. Whether prediction market contracts are securities — and whether wash-sale rules apply — is an open legal question. We flag this explicitly in the report rather than baking an assumption into the calculation. Ask your CPA.
How does FIFO cost-basis work?
FIFO means the first contracts you bought are treated as the first ones sold. If you bought 100 YES contracts at $0.40, then 100 more at $0.70, and later sold 100 — the sale is matched against the earlier $0.40 lot first. This is a deliberate choice, not an accident, and is noted in the report.
Are deposits and withdrawals included as income?
No. Moving money into or out of your account is not a taxable event. FileMyFills only counts gains and losses from completed trades (fills). This is a core correctness requirement — not a shortcut.
What is the reconciliation check?
After computing your gain/loss, we cross-check it against your deposit/withdrawal history and balance change. If they don't agree within a small threshold, we surface a warning in the report. A warning doesn't mean the number is wrong — it means you should review it with your CPA.
Is my API key stored?
No. Your private key is used once to fetch your trade history and then discarded. It is never written to our database or logs. If you want a new report in a future year, you re-enter it.
How do I use the CSV with my tax software?
The CSV is formatted similarly to a 1099-B, with columns for description, date acquired, date sold, proceeds, cost basis, and gain/loss. Most tax software (TurboTax, H&R Block, etc.) has an import option for this format. Or hand it directly to your CPA.
Didn't find your answer? This product is informational only. For questions about your specific tax situation, consult a qualified tax professional. See also our full disclaimer.