Handling Cash Transactions

A year ago, at the Long Beach show, I bought a (F-15 in my opinion) 1795 small eagle dollar for $3,300 using cash. I sent it into PCGS for grading. It cam back as "Questionable Authenticity" (PCGS-speak for counterfeit). This particular coin was a Chinese counterfeit that actually was portrayed in a Coin World column. Because I had a receipt, I was able to get my money back (the dealer even paid the extra $50 I spent on getting it graded).

No consider the situation were, instead of a $3,300 coin, I had bought a 1926-S Buffalo nickel in fine condition for $80 (plus tax) and it turned out to be counterfeit. Without a receipt, I would be out $80 (plus tax). In one sense, even small transactions (pick your lower limit, mine is $25) need proof-of-purchase.

 

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Excellent post and an most excellent reason for obtaining a receipt.

Another excellent point.

Gentleman, you've cured me. Gonna start asking for receipts for items purchased under $100.

 

Hummmm.....I guess I'm really different. I always pay in cash and I could care less about getting a receipt. Then again, all of the dealers I use know me on a first name basis. In all my years I've returned a total of 3 coins with ZERO problems. The dealers even ASKED me how much I paid them and gladly refunded my money in cash. Of course, I don't buy $3000 coins, the most I typically spend on a single coin is in the $200-300 range. I can see the point of a receipt in cases of coins costing > $500 just to protect yourself.

 

For me it depends. If I buy a couple of cheap recently issued circulation coins at a show or market, I pay cash and do not ask for a "formal" bill or receipt. If I purchase online (don't do eBay though), I get a bill/receipt anyway. And when buying a more precious coin, well, then I would insist on getting some kind of paper, no matter where I buy. Especially when the piece is from before, say, 1900. But I hardly ever buy such expensive coins.

Christian

 

There is nothing stopping you from generating an invoice and having the seller sign and date it on completion of the transaction. Offer the seller a copy if they want one. Heck you can even take a picture of the person you are buying from and the material your a buying with your cellphone. When you sell coins to a dealer do you as the seller generate an invoice. Probably not - in most cases it would be the coin shop , the buyer, who generates it.

 

The IRS will want to see the invoice. Without it, your cost basis is the face value of the coin. One could probably argue that the bullion value should be used as the basis.

I have had two CPA,s and a lawyer tell me the following. The IRS will work with folks on small amounts of money. If you have most of the invoices but only records on a few items, they will probably allow your figures. If you have no invoices or you tick off the guy from the IRS, you have a problem. They really get picky on larger value items and deals.

Many collectors don't worry much with having invoices and good records till the day comes to sell off a large amount.
I'll guess most of us here fall under the Hobby tax rates. That's like 30% plus whatever your state may get.

 

Another reason for getting receipts (even for small purchases) is that they add up over time. I don't plan on selling my collection, but when I do pass on (how's that for a euphemism for being dead), my heirs may need a cost basis for my collection. At one time, I had all 1401 coins that comprised every copper/silver/clad circulating coin (denomination & mintmark) minted in the 20th century. I would estimate that I paid less than $20 each for most of them. Even those, summed up, totaled many thousands of dollars. And having receipts will show the IRS/state tax guys [thanks Idhair for the previous post] that you aren't trying to pull the wool over their eyes.

I keep my receipts in a fireproof safe and it's surprising how little space they occupy. They are also entered in an Excel spreadsheet (with decent photos of the more expensive coins) with a copy in my safe deposit box. Granted, I may be at the extreme end of record keeping, but peace of mind is nice to have.

On this Christmas Eve, I wish all of you the best. :yes:

 

One thing I would like to add. Although USPS offers insurance, you actually have to prove the value of anything that goes missing. For this reason alone I would request a receipt.

 

I've bought coins from hundreds of dealers at both B&M's and at shows from the east coast to the west coast, and not once have I ever not received a receipt for my purchases. I just always assumed every dealer gave one out whether you bought something small or large.
Guy