Question for Coin Dealers, Receipts.

How do you handle or produce receipts as a coin dealer, whether you're buying or selling from the public or from other dealers?

 

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I'm not a dealer, but I've sold to a lot of dealers at coin shows. At shows, most don't provide receipts, or provide them only if asked. Most also deal in cash as much as possible.

At the pawn shop I frequent, there's a lot of paperwork for buying, and I assume even more for selling to them. (They want to know how to find you if it turns out the stuff you sold them was hot.)

 

I noticed the lack of receipts and credit cards at a FUN show. I guess I am paranoid in that if there is no proof that you purchased a coin at a certain price then the capital gain will be enormous. Or do most sales end in under the counter deals? Got to think that at some point Sam will get interested.

 

I have no idea how those paper-free dealers report their dealings to the IRS. Asking about it would seem rude.

(For what it's worth, even before NC abolished the sales tax on coins and bullion, it was rare for dealers at shows to collect it. If you did ask, they'd say it was "included in the price", wink wink. But again, the pawn shop always charged sales tax, because their dealings are heavily scrutinized.)

 

Dealers have never wanted credit cards at any show I've ever been to. The service fee they have to pay eats into their profit. Cash has always been preferred.

However, I have never not been given a receipt at a coin show. It is always hand-written, and has a description of the coin and the price I paid for the coin.

I keep all my receipts, hand-written, printed, ebay, heritage, GC, every receipt... it goes into a binder with the coin's ID number (a unique number in my excel spreadsheet). I can provide any receipt I've ever been given.

 

One has to wonder what would happen to coin shows if the bankers get their way and institute digital currency.

 

I’ve never had a receipt handed to me.

 

I remember the classified ads in the back of circa-1970 coin magazines, advertising coins for (say) "25c silver" or "35c silver". Mail them a couple of silver coins, they'd mail you back the coin you ordered.

I'd expect lots and lots and lots of such bartering at shows if anyone tries to force tracked or intermediated payments to replace cash. Coin collectors and dealers tend to be a... determined bunch.

 

Receipt? What's that? Sounds like evidence to be used against me.....

 

Like many here my collection will be left to my heirs, so having receipts to prove ownership is necessary. My oldest son will be executor and knows where paperwork is stored.

 

A small business has options on keeping track of profit. The owner of one of the shops I worked in was a CPA and he never had a problem with the IRS. He did not keep track of the profit on every coin.
He kept a running balance on everything in the shop based on his cost.

He had a simple ledger and recorded sales, purchases and cash on hand. From this he could figure his profit before expenses.

As far as receipts. Most dealers will give you a receipt on a large purchase but don't care to on small purchases. Most will if you ask.

As a collector you need proof of what you paid on everything you sell. From what I understand, the IRS will not give you a hard time over small amounts but they can if you tick them off. Just having good records of your own go a long way in having a happy ending to an audit.

It would be cool for folks to ask their CPA or tax service and report back on what they have to say.

 

That is one thing I was wondering about. Obviously you should leave a "paper trail" or evidence, of your transactions to support your profit/expense figures, but are receipts the only proof, or is a written number in a sales/purchases notebook sufficient?

 

I have never been to a coin show but have bought/won hundreds of coins. I have a copy of my purchase from every single transaction going back to the early 1980's in my filing cabinet. I can't imagine not being offered and or getting a receipt. james

 

As a buyer, I insist on a receipt. On the extremely rare occasions where a dealer has not agreed to provide a receipt I have either walked away from the deal or written my own receipt on the spot recording dealer's name and contact information, date, coin particulars and price and the fact that dealer refused to provide a receipt.

But that said, almost every dealer I work with voluntarily offers a receipt.

If I ever get audited, I have all that information in my Excel records plus a banker's box with all those paper receipts just thrown in.

It is important to remember that if you ever get audited by the IRS, you are in far better position to argue the cost basis of the coin if you have a record. Any record is better than none but the best is a dealer receipt.

The downside of not having any evidence to support a claimed cost basis is that the IRS can, and has, said the cost basis is zero, thus the capital gains on which taxes are owed is calculated to be 100% of what you sell the coin for. Ouch!

Now, I don't insist on a receipt for anything that costs less than about $50 and I don't even bother recording these purchases. But there are almost none of those nowadays so it doesn't really matter.

The situation for dealers is much more complex as dealers can range from corporate outfits to vest pocket guys on the bourse floor. Plus, bona fide dealers don't have to deal with capital gains as their cost and sale figures are business expenses and sales revenues and profits taxed at business rates.

But as a general piece of advice for dealers, I would offer that the more records you have to support your accounting, records and taxation position the better your argument may be. Generally, the IRS doesn't like to "take your word for it".

 

I was getting ready to sell off duplicate coins and collections I was no longer interested in so I asked my tax accountant about calculating capital gains/losses. I posited that I sold 10 coins individually through Great Collections but via one shipment and one auction event . Each coin had its own hammer price plus fees. Plus I had records documenting what I spent to purchase each coin, including buyers premiums, S&H, etc. In other words, everything on both sides of the transaction was known and documented.

The basic question I asked him was "Must I consider capital gain or loss of each individual coin in the ten coin lot or can I aggregate the total gain/loss of the entire ten coin lot even though each coin was auctioned off individually?" He told me I could aggregate the lot. That answer can make a big difference in the calculation of capital gains since you cannot take any credit for a loss if you must consider each coin individually. I'm not sure I have bought fully into his answer since it seems apparent to me that the government will always interpret things to their advantage not to mine.

Also note that the situation as I presented it to the accountant was a single event, the one auction. I don't think you can extrapolate his opinion to multiple sales over time, locations, and venues. Be nice if we could but I don't think it would fly at all with the IRS.

Above is not advice.

 

I tease about not having records, but then I been hoarding coins since I was a pimple faced kid. It would be a monumental task for me to say the least.... But I have a question. Why is a collected coin any different than a collected fishing lure or a collected old Coke bottle? I certainly don't fault anyone for keeping records. Heaven knows in my business my records are meticulous, both digitally and on paper. But that is my business. My coins are my refuge. My way to wash away the daily dirge of business. Why would the tax man have any more need to know the coins that lie in my safe from the fishing lures that lie in my tackle box?

 

If you buy coins from a non-dealer, do you make a receipt for yourself recording how much you paid for them?

 

Ever have customers walk away when you ask for their identities?

 

Absolutely. As far as capital gains tax and estate planning goes, it doesn't matter what the source of the coin may be.