Ordinary income

Ordinary income: the swap argument.

For people who report event contracts as ordinary income: gains taxed at ordinary rates, and a net loss that can come off other income in full.

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Free to estimate. Forms coming; licensed CPAs can prepare it now.

Example 2026 yearRead-only · Reviewed engine · Licensed CPAs
Example 2026 year1,524 trades · 3 venues
+$18,240
net · Jan 1 to Dec 31
1,012386126File
Ordinary incomethe swap argument
Other income · $70,000
+$18,240
Other incomeone total
A gain
ordinary rates
Realize forms
coming
If −$18,240
$18,240 off other income
Prepared by a CPAavailable now
Licensed CPA · assignedFeb 3
Event contracts18,240
Reasonable basiswritten
Forms coming
With your CPApreparingPrepared by licensed CPAsforms coming
How it works

The swap argument, in three steps.

  1. 1. Event contracts as swaps

    A federal appeals court has held that sports event contracts are swaps under commodities law.

  2. 2. Outside Section 1256

    Section 1256(b)(2)(B) excludes swaps, so the 60/40 split would not apply.

  3. 3. Ordinary gain or loss

    Not a wager and not a capital asset, the result is ordinary: a net loss can offset other income in full, with no $3,000 cap.

What you get

Your year, estimated as ordinary income.

  • EstimateYour year as ordinary income, beside the other three ways. Live now.
  • FormsComingComing.
  • Licensed CPAPrepares it and documents the reasonable basis, attached to your return.
2026 · ordinary income
Estimate✓
FormsComing
CPA basis✓

Unsettled

Precedent, and arguments against.

For: the swap exclusion is written into Section 1256, and a court has called some event contracts swaps.

Against: a regulator's swap label is not a tax ruling. The other three routes argue the contract is a capital asset, a wager or a Section 1256 contract.

There is no IRS guidance for prediction markets, but all income must be reported. Realize explains the options so you can choose for yourself or with one of our licensed CPAs.

The same year, every route.

See this year beside capital gains, gambling and Section 1256 before you choose.

Compare routes

Questions about ordinary income

Realize estimates it now; the forms are coming. Our licensed CPAs can prepare an ordinary-income return today and attach an explanation of the reasonable basis.

See your year as ordinary income.

Free to estimate. Book a call to file it with a licensed CPA.

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Free to estimate. Forms coming; licensed CPAs can prepare it now.