• Featured in Law360, Wired, Business Insider, Marketwatch, Finops and Morningstar for Prediction Market Expertise.

Prediction Market CPA for Trading Firms, Market Makers & Professional Traders

Forbes Best-In-State Top CPA for 2025 and 2026

Recognized by Forbes as a Best-in-State Top CPA in 2025 and 2026

Featured in Forbes for "Leading the Charge on Crypto Accounting": Read the Forbes Feature

Prediction-market accounting and tax for professional trading activity. We help trading firms, market makers, funds, and high-volume traders reconcile transaction activity, maintain supportable books, analyze federal tax treatment, and prepare the related tax reporting.

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Nationally Recognized.

Patrick Camuso and Camuso CPA named as Forbes Best-In-State Top CPA
Bloomberg Tax
Patrick Camuso and Camuso CPA featured in Accounting Today
Forbes
Patrick Camuso and Camuso CPA featured in The Financial Times
Patrick Camuso and Camuso CPA featured in Vice
tax section odyssey aicpa cima
Patrick Camuso and Camuso CPA featured in Coinmarketcap
Marketwatch features Camuso CPA
Morningstar
Patrick Camuso and Camuso CPA featured in Business Insider on prediction market tax reporting.
Tax Notes
Federal & Global
Published Research

Prediction Market Event Contracts: A Tax Classification Analysis

Co-authored with the former head of the IRS Office of Digital Assets and co-author of the §6045 digital asset broker reporting regulations. A federal tax classification analysis examining how prediction market event contracts may be treated under §165(d) wagering rules, §1256 contract treatment, and general capital or ordinary income rules. Published in Tax Notes Federal and Tax Notes Global.

Read in Tax Notes → Read All Publications →

Prediction Markets Create Specialized Accounting and Tax Issues

Professional prediction-market trading firms, market makers, and high-volume traders can generate substantial transaction volume across multiple venues, operate automated or systematic strategies, maintain significant open positions, and receive maker rebates, liquidity incentives, and other trading-related payments.

As activity scales, the accounting and tax requirements become materially more complex. The books need to capture and reconcile trading activity in a manner that supports period-end close, financial reporting, and year-end workpapers, while the federal tax treatment may depend on the contracts traded, the taxpayer’s capacity, and the manner in which positions are transferred, offset, or resolved.

Prediction-market firms also face unresolved federal tax questions involving character, timing, loss treatment, trade-or-business status, §1256, wagering treatment, entity and owner reporting, and estimated-tax planning. Those issues cannot be addressed reliably without accounting records that preserve the relevant transaction and position-level facts.

Camuso CPA provides both prediction-market accounting and federal tax services, allowing professional trading firms to coordinate the accounting, tax characterization, planning, and compliance work within a single CPA relationship.

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Patrick Camuso | Forbes Best-In-State Top CPA
Patrick Camuso, CPA is a Forbes 2025 Best-in-State Top CPA and founder of Camuso CPA.

Our Prediction Market Accounting & Tax Process

Step 1: Trading Activity, Entity & Records Review

We begin with the firm’s prediction market activity, entity structure, ownership, venues, trading strategies, transaction volume, available records, existing accounting, and prior tax reporting. This establishes the scope of the accounting, tax analysis, planning, and compliance work required.

Step 2: Accounting & Reconciliation

We address the accounting necessary to support the trading activity, including transaction-level records, reconciliation, subledger and general-ledger reporting, and period-end close where applicable. The scope depends on the firm’s trading model, venues, transaction volume, and existing accounting process.

Step 3: Tax Analysis & Planning

We evaluate the federal tax treatment of the relevant prediction-market activity based on the contracts traded and the taxpayer’s facts. Where appropriate, the work may include formal position analysis, entity and owner considerations, estimated-tax planning, and other tax-planning matters arising from the trading business.

Step 4: Reporting & Ongoing Compliance

The accounting records and adopted tax positions are carried through the year-end reporting process, including book-to-tax workpapers, entity and owner reporting, federal and state tax compliance, and continuing accounting and tax support where included in the engagement.

Prefer to book a time directly?

Prefer to reach us directly? Email info@camusocpa.com or call (704) 249-3179.

Who We Help: Prediction-Market Trading Firms, Market Makers & Professional Traders

Camuso CPA works with professional prediction-market participants whose transaction volume, trading strategies, entity structure, or tax and accounting requirements extend beyond ordinary investor reporting. Our clients range from founder-led proprietary trading firms and market makers to funds and high-volume professional traders operating across one or more prediction-market venues.

  • Market Makers & Liquidity Providers
  • Proprietary Trading Firms
  • Algorithmic & Systematic Traders
  • Multi-Venue & Arbitrage Traders
  • Funds & Investment Vehicles
  • High-Volume Professional Traders

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Common Prediction Market Accounting & Tax Issues We Address

  • Reconciling venue, cash, wallet, and internal trading data into supportable accounting records.
  • Accounting for large fill volumes, open positions, fees, maker rebates, and liquidity incentives.
  • Maintaining consistent accounting and reporting across Kalshi, Polymarket, and other prediction-market venues.
  • Evaluating the appropriate tax treatment across different contract populations, transaction types, and taxpayer facts.
  • Addressing estimated taxes, entity and owner reporting, timing, loss treatment, and other planning considerations.
  • Ensuring the accounting records, tax workpapers, and filed returns reflect the same underlying trading activity.
Patrick Camuso, Forbes 2025 Best-in-State Top CPA was featured in Forbes for leading the charge on crypto accounting
Patrick Camuso, CPA. Featured in Forbes for Leading the Charge on Crypto Accounting.

Prediction Market Accounting & Tax Services

Accounting and tax services for professional prediction-market trading activity.

Prediction Market Accounting & Reconciliation

Transaction reconstruction, venue and cash reconciliation, subledger accounting, general-ledger integration, and period-end close for professional prediction-market activity.

Ongoing Accounting & Financial Reporting

Recurring monthly or quarterly accounting, reconciliation, close, financial reporting, and year-end workpaper support for trading firms and market makers.

Prediction Market Tax Analysis & Compliance

Tax characterization, book-to-tax workpapers, entity and owner reporting, and federal and state tax compliance for prediction-market activity.

Tax Planning & Written Tax Positions

Tax planning, estimated-tax analysis, entity considerations, and written technical support for material or uncertain prediction-market tax positions.

Why Prediction Market Trading Firms Work With Camuso CPA

Professional prediction-market activity can require both specialized accounting and tax analysis. Market makers, proprietary trading firms, and high-volume traders may need transaction-level accounting, reconciliation, period-end close, and financial reporting alongside tax characterization, planning, and compliance.

Camuso CPA provides both. Our prediction-market work spans the accounting records underlying the trading activity through book-to-tax workpapers, federal tax analysis, written position support, and tax filings. This allows the accounting and tax treatment to be developed from the same underlying activity rather than handled as disconnected year-end processes.

Service Camuso CPA General CPA / Accounting Firm
Prediction-market accounting and reconciliation ✔ Varies
Prediction-market subledger and general-ledger integration ✔ Varies
Market-maker and high-volume trading accounting ✔ Varies
Ongoing accounting, period-end close, and financial reporting ✔ Varies
Book-to-tax workpapers and reporting integration ✔ Varies
Federal tax characterization and planning ✔ Varies
Written federal tax-position support ✔ Limited
Partnership and corporate tax returns ✔ ✔
High-net-worth individual tax returns ✔ ✔
Prediction Market Accounting & Tax

Case Study

Professional Prediction-Market Market Maker — Accounting and Federal Tax Analysis

Client Type Professional Trading Firm
Activity Automated Market Making
Scale Millions of Fills
Focus Accounting, Reconciliation & Federal Tax

The Problem

The firm’s prediction-market activity had reached a transaction volume and level of complexity that required transaction-level accounting beyond platform summaries. The engagement also involved unresolved federal tax issues affecting the treatment and reporting of the firm’s prediction-market activity.

What We Did

Camuso CPA developed transaction-level accounting records and a prediction-market subledger designed to support reconciliation and general-ledger reporting. In parallel, we analyzed the federal tax treatment of the relevant prediction-market activity and documented material reporting positions.

The Outcome

The firm established a coordinated accounting and tax process in which the transaction records supporting the books also provide the factual basis for year-end workpapers and federal tax reporting. The engagement created a consistent connection between the firm’s trading activity, accounting records, and adopted tax positions.

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Prediction Market CPA FAQ

Prediction-market activity can require both transaction-level accounting and specialized federal tax analysis. For professional traders, market makers, and trading firms, the work may include reconciliation of trading activity, subledger and general-ledger accounting, period-end close, book-to-tax workpapers, federal tax characterization, planning, and tax compliance.

Camuso CPA works across both the accounting and tax sides of prediction-market activity rather than treating the engagement solely as a year-end tax-return exercise.

Yes. Depending on the engagement, Camuso CPA can provide recurring transaction reconciliation, subledger maintenance, general-ledger accounting, monthly or quarterly close, financial reporting support, book-to-tax workpapers, tax projections, and year-end tax compliance.

For professional trading firms, the relationship can include ongoing accounting and tax support rather than only a standalone tax opinion or annual return.

Yes. Camuso CPA works with professional prediction-market trading operations, including market makers, proprietary trading firms, systematic traders, and other high-volume participants.

These firms may operate with small teams while generating substantial transaction volume through automated strategies, maintaining open positions across multiple markets, and receiving maker rebates or liquidity incentives. Their accounting and tax requirements are driven by the trading activity and reporting obligations, not by employee count.

Current federal tax law does not provide one universal characterization for all prediction-market contracts.

Depending on the particular contracts and taxpayer facts, potentially relevant frameworks may include wagering treatment under §165(d), §1256, §§1234 and 1234A, general capital-asset principles, ordinary-income treatment, trade-or-business treatment, hedging provisions, and other federal tax rules.

The appropriate treatment should be evaluated based on the specific contracts, transaction mechanics, taxpayer capacity, and other relevant facts rather than assumed from the platform alone.

No. A venue’s regulatory status does not by itself establish §1256 treatment.

The particular contract must fit within an applicable category of §1256 contract and satisfy the relevant statutory requirements. Applicable exclusions, including the exclusion for certain swaps and similar agreements, must also be considered.

Accordingly, §1256 treatment should be evaluated at the contract level rather than assumed solely because the contract trades on a regulated venue.

Whether §165(d) applies depends on the particular transaction and relevant facts. Prediction-market contracts should not be characterized as wagering or non-wagering solely because of the venue on which they trade or the regulatory terminology used to describe them.

The distinction can be economically significant because wagering characterization affects the treatment and deductibility of losses, including the limitations applicable beginning in 2026.

Federal tax analysis depends on facts established by the underlying trading records.

Depending on the issue, those records may need to establish the contracts traded, executions, position changes, amounts paid or received, transaction endpoints, fees, rebates, incentives, open positions, and how the resulting activity was reflected in the books.

Incomplete or unreconciled accounting records can therefore create uncertainty in the factual basis supporting the tax analysis and filed returns.

The appropriate records depend on the venues, trading activity, entity structure, and tax positions involved.

Professional firms generally should retain available source trading data, transaction histories, position and settlement records, venue statements, cash and wallet activity, fees, rebates and incentives, accounting records, and supporting workpapers sufficient to reconcile the activity and support the amounts and positions reported.

For high-volume firms, summary platform reports alone may not provide sufficient detail for the accounting and tax work required.

Yes.

Camuso CPA can provide specialized prediction-market accounting or tax services while coordinating with existing professional advisers. The appropriate division of responsibility depends on the firm’s existing accounting systems, reporting requirements, and professional-service relationships.

For example, Camuso may maintain the prediction-market accounting and tax work while an independent auditor, fund administrator, regulatory counsel, or other adviser continues performing its existing role.

Ideally before the trading activity becomes difficult to reconstruct or a reporting deadline forces the accounting and tax issues to be addressed under time pressure.

Common triggers include rapidly increasing transaction volume, beginning market-making activity, adding automated strategies, expanding across venues, adding owners or entities, raising outside capital, establishing recurring financial reporting, preparing for audit or diligence, evaluating material tax positions, or approaching year-end without reconciled trading records.

For professional firms, addressing the accounting and tax requirements earlier generally provides a stronger basis for period-end reporting, planning, and compliance.

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