The Tax Thread

Futures trading (or any day trading that is your primary business) is treated as an income activity by CRA, so capital gains and superficial rule do not apply.

Dan08 

I am referring to The Superficial Loss rule for buying back "identical property" within 30 days of the loss. The Canadian Revenue Agency says any identical property purchased within 30 days of the loss would make it a superficial loss opposed to a capital loss. The CRA website also states that Future contracts for the same commodity with the same delivery month are considered Identical Property. So basically my question is, I can not just show a full 1 year total loss statement to my accountant? I will have to sniff out superficial losses since I day trade and most likely took a trade before the 30 day period after a loss? Any suggestions would be great.

Snoop, even if I have not registered a business or a LLC and have a full time job, I will have to report my futures day trading as a regular business income? So my total losses for the year would be shown then I assume?

I'am still obviously going to talk to my accountant next year around time for filing, but just trying to learn a little on my own before hand, thanks.

Snoop 

Futures trading (or any day trading that is your primary business) is treated as an income activity by CRA, so capital gains and superficial rule do not apply.

I recently asked the CRA and the agent said it would be fine to report my losses as a capital loss? He also said its ok to ignore the superficial loss rule as long as all my losses are not just bunched up near the year end which he said a lot of traders do.

Should I go with this information as being correct? First year trader so I am still puzzled on which method to go with.

Go with the guidance that CRA provided you (hopefully you took their name), and mention it to your accountant if you use one.

Not surprising that there is conflicting info with the CRA regarding futures. The interpretation bulletin for fututres was last updated in 1978.

Dan08 

I recently asked the CRA and the agent said it would be fine to report my losses as a capital loss? He also said its ok to ignore the superficial loss rule as long as all my losses are not just bunched up near the year end which he said a lot of traders do. Should I go with this information as being correct? First year trader so I am still puzzled on which method to go with.

I took the gentlemans name from the CRA, but I plan to call them up again next year sometime in January to ask one more time to be on the safe side. If I get the same response I will go ahead and use the capital loss, if I get a different answer I am going to have to go into the CRA office I think and talk to them in person about this to make sure I get the correct answer.

What is the IRS tax for winnings? So lets say I made $60k in a year, how much would the IRS tax?

ctmvas 

What is the IRS tax for winnings? So lets say I made $60k in a year, how much would the IRS tax?

100% of it is subject to taxation.

I do not have a separate business set up to trade in. I trade in a joint account and only trade futures. I get a single 1099 at the end of the year from my broker. This 1099 simplifies things considerably and as such is a single taxable event regardless how many trades I place during the year. I am taxed on the amount of profit/loss reported on that 1099 and that's it. Very simple.

My plan for the near future is to trade from a Roth account. When I turn 59 1/2, I will be able to withdraw from my Roth account without penalty. By definition as I understand the tax laws is that proceeds from a Roth account are not taxable. Only contributions made to the Roth account are taxable at the time of the contribution. So, being as I will be trading from an existing Roth account, any money made trading futures will not be taxed when I withdraw the money. Further, because I don't any other form of income from a "real" job, proceeds from my Roth account will not effect my ability to draw social security.

Anyone with experience or knowledge contrary to what I've outlined is very welcome to comment.

ctmvas 

What is the IRS tax for winnings? So lets say I made $60k in a year, how much would the IRS tax?

Assuming you are in USA you would pay 60% of profits at the long-term capital gains tax rate and 40% at the ordinary income tax rate for futures trades.

MWinfrey 

I do not have a separate business set up to trade in. I trade in a joint account and only trade futures. I get a single 1099 at the end of the year from my broker. This 1099 simplifies things considerably and as such is a single taxable event regardless how many trades I place during the year. I am taxed on the amount of profit/loss reported on that 1099 and that's it. Very simple. My plan for the near future is to trade from a Roth account. When I turn 59 1/2, I will be able to withdraw from my Roth account without penalty. By definition as I understand the tax laws is that proceeds from a Roth account are not taxable. Only contributions made to the Roth account are taxable at the time of the contribution. So, being as I will be trading from an existing Roth account, any money made trading futures will not be taxed when I withdraw the money. Further, because I don't any other form of income from a "real" job, proceeds from my Roth account will not effect my ability to draw social security. Anyone with experience or knowledge contrary to what I've outlined is very welcome to comment.

This is a very interesting concept that I am looking into as well. Huge tax savings potential. I'm wondering how many traders here use this method for tax reasons? Also, for those who use it, do you use an automated strategy in it as well? Thanks!