I believe since broker reported as mark to market he will have to recognize gain, and they are treated as 60% long term and 40% short term reported on schedule D, regardless of how long the contracts were held. If he has properly and timely identified a section 1256 contract as a hedge then the mark to market rules don't apply, But I am not sure how that works. The few I had the client told me he had not identified them as hedge.