Dug this thread up as I'm doing research on electing MtM or not. As I understand it, I don't think anyone answered this correctly (let me know if I'm way off). You elect MtM on stocks. You have a 20k gain which is converted to ordinary gain. You don't elect MtM on futures. As a result, gains/losses on futures remain capital gains/losses. So if you lose 10k, you are capped at 3k to deduct against your ordinary loss. Your outcome is 20k-3k=17k. So you are taxed on 17k at your ordinary tax rate.