"Marked to Market Rules
A section 1256 contract that you hold at the end of the tax year will generally be treated as sold at its fair market value on the last business day of the tax year, and you must recognize any gain or loss that results. That gain or loss is taken into account in figuring your gain or loss when you later dispose of the contract, as shown in the example under 60/40 rule, below.
Hedging exception. The marked to market rules do not apply to hedging transactions. See Hedging Transactions, later.
60/40 rule. Under the marked to market system, 60% of your capital gain or loss will be treated as a long-term capital gain or loss, and 40% will be treated as a short-term capital gain or loss. This is true regardless of how long you actually held the property.
Example. On June 23, 2000, you bought a regulated futures contract for $50,000. On December 31, 2000 (the last business day of your tax year), the fair market value of the contract was $57,000. You recognized a $7,000 gain on your 2000 tax return, treated as 60% long-term and 40% short-term capital gain.
On February 2, 2001, you sold the contract for $56,000. Because you recognized a $7,000 gain on your 2000 return, you recognize a $1,000 loss ($57,000 - $56,000) on your 2001 tax return, treated as 60% long-term and 40% short-term capital loss. "
This is for mark to market, I am not sure otherwise.
long term tax rate is lower than short term (usually you get it when you hold stocks for 5 years. futures are advantageous because even if you hold them for 10 seconds, 60% will be considered long term).
