If a Future Settles on December 31st, When Is the Gain or Loss Realized for Tax Purposes?

If the future is a Section 1256 contract, the gain or loss is realized on December 31st due to the mark-to-market rule, regardless of the actual settlement. If it is a non-Section 1256 contract, the gain or loss is realized on the actual settlement date, December 31st, as this is the date the contract is closed.

In both cases, the gain/loss is reported in that tax year.