How to claim day trading losses as a full-time day trader?

[TurboTaxBrenda1]

As a full time day trader you should have received  T5008 slips which will show your profits or losses from securities you sold during the year. You will enter them and continue as the instructions on the following TurboTax article: How do I report income made from day trading?

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[sdbecker70]

Turbotax people. What we need to know is how to report the daytrading loss on the T2125 form.

In short, for people with a net LOSS daytrading, we should be entering a negative amount on line 3A, but Turbotax does not allow us to enter a negative amount. How do we report this net loss with Turbotax?

[brad1028]

Please follow the link you provided.  You cannot enter day trading business losses from this link, if you can please provide more detail because I am missing it.

[TurboTaxBrenda1]

To report those stock trading transactions for income tax purposes, as anyone will note you cannot report negative income for "Gross Sales, Commissions or Fees...", that is because you are "Trading".  Consider the financial asset as you would any other capital asset being bought and sold as a business, which is reported in the Cost of Goods Sold section of the T2125, as well as for your records in bookkeeping.  There would be an Opening Inventory, Purchases, Direct Wages costs, Subcontracts, and Other Costs, all of which sums to an overall Cost of Goods. Next you determine the value of your Closing Inventory.  The difference from your Cost of Goods and your Closing Inventory determine if you had a Profit or Loss in your trading. For reference, please review “Part 3D – Cost of goods sold and gross profit” in the guide T2125 “Self-employed Business, Professional, Commission, Farming, and Fishing Income: Chapter 2 – Income”.  See: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002/t4002-4.html#...

Note, there are special considerations and treatment for assets ("stocks") being brought into the business as opening inventory.  Additionally, I would like to re-emphasize the importance treating this endeavor as any other business trading in goods, where you would maintain accurate records and bookkeeping of all transactions, as well as a log of your time allocated to this business activity. Should you receive a Supplemental Review request or an Audit from the CRA to substantiate your declarations, including claims of a loss, these records would be essential in  your reply.

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