Futures Trading Tax Question

Hello I really need some help on this matter. I traded Futures for the first time last year 2010 and I am confused on how about to go reporting my Capital Gains and Losses. First thing I was told by the CRA that is if I have a Capital Gain followed by a capital loss, if the loss is within 30 days of the first trade and is the same contract type, it is considered identical property and a superficial loss. So it cannot be reported against a capital gain however I can add the loss to the purchase price of the substituted property. Well in this case, is the first trade now considered the substitute property since it is 30 days before/after the loss? here is an example.

February 4 Investment #1 - buy 1 MAR 10 CL contract for $90.00 a barrel and sell at $90.10 a barrel. Capital Gain of $100 - 5 fee, total capital gain is $95

February 5 Investment #2 - buy 1 MAR 10 CL contract for $91.25 a barrel and sell at $91.10 a barrel. Capital Loss of $150 + $5 fee, total capital loss is $155

So now the CRA tells me I cant report that as a capital loss and deduct it from my capital gains because I purchased the same contract type 30 days before or after the loss. So the rules on the CRA website says to add the amount of the superficial loss to the adjusted cost base of the substituted property. So is it correct now to add the loss to the first trade on February 4? Does this count as the substituted property? here is the link to their website discussing it.


I talked to apparently a higher up CRA agent who told me the first trade would be a Capital Gain and the second trade would indeed be a Capital Loss if I take no trades 30 days after the loss of the same contract type? But then why does the rule state its superficial if I take a trade 30 days before the loss also? So confused as I am getting different answers.

A superficial loss can occur when you dispose of capital property for a loss and:
• you, or a person affiliated with you, buys, or has a right to buy, the same or identical property (called "substituted property") during the period starting 30 calendar days before the sale and ending 30 calendar days after the sale; and
• you, or a person affiliated with you, still owns, or has a right to buy, the substituted property 30 calendar days after the sale.

I really need advice if there are any Canadian traders, or even American Traders who may know the correct way to do this? I had 1 rep tell me that a substituted property would only be 30 days after the loss, but then why does the superficial rule state 30 days before/after the sale of the loss.

Any advice would really be appreciated.
I can't speak about Canadian tax law but in the USA if you are trading futures you can report futures gains and losses on Form 6781 which is for "Gains and Losses From Section 1256 Contracts and Straddles." These contracts are marked to market so there should be no wash sale issues (which is what comes into play if a capital loss is taken and then the same asset is purchased within 30 days).

The 1099 you received from your broker should be summarizing the net results of your futures transactions under "Proceeds From Broker & Barter Exchange Transactions - OMB . 1545-0715 - Regulated Futures Contracts" which lets you treat futures gains and losses this way. Your aggregate profits and losses from that get reported on the Schedule 1256. This information then gets reported on lines 4 and 11 of Schedule D which is the Capital Gains and Losses Form in the USA.

I suggest that you consult tax help that is better qualified to help you.