QastLedger
If you traded on Kalshi this year, the biggest question for your tax return is how your gains are characterized. The answer can change your federal tax bill by thousands of dollars on the same profit.
Kalshi is a CFTC-regulated exchange
Kalshi operates as a designated contract market registered with the Commodity Futures Trading Commission (CFTC). That matters because Section 1256 of the tax code gives special treatment to certain contracts traded on regulated exchanges.
The IRS has not issued guidance written specifically for event contracts. Even so, Kalshi's own year-end tax statement reports its contracts as Section 1256 contracts, and QastLedger applies the same treatment so your numbers match.
What the 60/40 rule does
Gains and losses on Section 1256 contracts are split into 60% long-term and 40% short-term, no matter how long you held the position. A contract you held for ten minutes gets the same split as one you held for ten months.
Long-term capital gains are taxed at lower rates (0%, 15% or 20% federally) than short-term gains, which are taxed at your ordinary income rate. Here's the difference on a $10,000 net gain for someone in the 24% bracket:
| Treatment | Short-term | Long-term | Federal tax |
|---|---|---|---|
| All short-term | $10,000 × 24% | $0 | $2,400 |
| 60/40 split | $4,000 × 24% | $6,000 × 15% | $1,860 |
That's $540 less on the same profit. At the top brackets, the 60/40 split works out to a maximum blended rate of about 26.8%, compared with 37% for ordinary short-term gains. These figures leave out state tax and the 3.8% net investment income tax.
Open positions are marked to market
Section 1256 has a second rule traders often miss. Any contract you still hold on the last business day of the year is treated as if you sold it at its fair market value on that day. You report the gain or loss on that year's return, even though you haven't closed the position.
When you close the position the next year, your starting point is that year-end value, so the same gain isn't taxed twice. It does mean you need a year-end price for every open contract. QastLedger looks up the live price where it can, and lets you enter one by hand where it can't.
Fees reduce your gain
Kalshi charges trading fees on many contracts. Those fees reduce your gain, or add to your loss, so leaving them out means overstating your profit. QastLedger shows gross P&L, fees and net P&L separately for every contract, so you can see exactly what you're reporting.
Where it goes on your return
Section 1256 gains and losses are reported on Form 6781. From there, the 40% short-term share goes to Schedule D line 4 and the 60% long-term share goes to Schedule D line 11. For a full walkthrough, read Form 6781 vs. Form 8949.
This guide is general information, not tax advice. Tax treatment of event contracts is still evolving, so confirm how it applies to you with a tax professional.