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The 5 percent withdrawal fee is included in the calculation whether or not the funds in question have actually been withdrawn from the account.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