Pursuant to IRS regulations, PredictIt is required to issue Form 1099 to any trader, resident in the U.S., who has a net profit of $600 or more in any calendar year.
For IRS reporting purposes, we calculate net profit as follows:
Net Profit = Gross Profits – Losses – Trading Fees – Withdrawal Fees.
The 5 percent withdrawal fee on net profit for the calendar year is included in the calculation whether or not the funds in question have actually been withdrawn from the account.
For example, a trader who had gained $1000 on the sale of some shares, lost $200 on the sale of other shares, and had paid $100 in fees on her profitable trades would have $700 remaining before the 5 percent withdrawal fee. Net profits for tax purposes would be:
$1000 - $200 - $100 - $35 = $665