How Is the "Mark-to-Market" Rule Applied to Cryptocurrency Futures for Tax Purposes? ⎊ Path

How Is the “Mark-to-Market” Rule Applied to Cryptocurrency Futures for Tax Purposes?

The mark-to-market rule under Section 1256 requires traders to treat all open contracts as if they were sold at fair market value on the last day of the tax year. Any resulting gain or loss is realized for that year, even if the contract has not yet been closed or expired.

This prevents tax deferral. For regulated crypto futures, this gain/loss is then subject to the 60/40 capital gains split.

This is generally simpler than tracking every trade's holding period.

How Does the Mark-to-Market Election (Section 475) Change the Ordinary Vs. Capital Income Distinction?

Does the Realization of a Gain/loss on a Future Depend on the Withdrawal of Funds from the Exchange?

How Does the Mark-to-Market Rule Simplify or Complicate Tax Reporting for Traders?

How Does the Constructive Sale Rule Prevent Tax Deferral?

What Is the Exception to the Constructive Sale Rule for Closed Transactions?

How Do Different Tax Laws in the US and EU Affect Cryptocurrency Investments?

How Is a “Short Sale” Treated for Tax Purposes upon Physical Delivery?

Does the IRS Explicitly State That Crypto Futures Fall under Section 1256?