QastLedger
Most traders assume a position only affects their taxes once it closes. For Kalshi contracts, that isn't true. Because they're reported as Section 1256 contracts, open positions are taxed every year whether you sold them or not.
What mark-to-market means
On the last business day of the year, every Section 1256 position you still hold is treated as if you sold it at its fair market value that day. The gain or loss goes on that year's Form 6781, and it's split 60% long-term and 40% short-term like the rest of your Kalshi results.
For the 2026 tax year, that day is Thursday, December 31, 2026.
What happens next year
When you close the position or the market resolves the following year, your starting point is the year-end value, not what you originally paid. That way the part of the gain you already reported isn't taxed again.
An example
You buy 200 YES contracts at 30¢ in November, for $60. On December 31 they're trading at 55¢, so the position is worth $110.
| What happens | Tax year | Gain or loss |
|---|---|---|
| Marked to market at 55¢ on Dec 31 | 2026 | +$50 |
| Market resolves YES in February, paying $200 | 2027 | +$90 |
| Market resolves NO in February, paying $0 | 2027 | −$110 |
Either way, the two years add up to your real result: $140 profit if it resolves YES, or a $60 loss if it resolves NO. Mark-to-market only changes when the gain or loss is taxed. Fees are left out here to keep the math simple.
Why this matters
- You can owe tax on money you haven't collected. A big open winner on December 31 creates taxable gain this year, even if the market hasn't resolved.
- Losses count too. An open position that's down at year end gives you a loss this year, without selling. That's also why tax-loss harvesting usually doesn't help on Kalshi.
- You need a year-end price for every open contract. Without one, your Form 6781 is incomplete.
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.