How Does the Timing of Settlement for a Crypto Future Impact the Tax Year of the Gain or Loss?

For Section 1256 crypto futures, the mark-to-market rule means that all open contracts are deemed settled on December 31st, realizing a gain or loss for that tax year. This overrides the actual settlement date.

For non-Section 1256 futures, the gain or loss is realized only upon the actual closing or settlement of the contract, which determines the tax year.