documenting purchases for tax reasons

BBN

If one were to keep track of how much they spent on PM purchases, is hand-written documentation of date and price enough to satisfy for tax purposes when it comes time to sell?

derryb

For filing purposes yes. For IRS auditing purposes maybe. IRS looks for a record keeping system that shows good faith and accuracy by the tax payer. Best to have purchase receipts. If not, a good ledger or spreadsheet will probably get by. You need a separate receipt/entry for each item. If you buy multiple items in one purchase, divide the cost accurately between them. Only time lumping purchased items together works is when you sell them in the same lump.

BBN

Gotcha. I recently started buying gold instead of silver and have been purchasing a 1/10 AGE every payday. I was thinking about putting each one in a flip with the coin in one side and a little piece of paper noting date of purchase and cost in the other slot. Guess I should make a file folder for purchase receipts too. Thanks!

jmski52

You can organize your spreadsheet to reflect what you have by metal and/or denomination, and then by date of acquisition along with the other pertinent data.

You should also construct a 2nd spreadsheet for when you sell, and make the columns the same as those on the first spreadsheet. This way, you can cut 'n paste or copy from your 1st spreadsheet onto your 2nd spreadsheet right when you sell, and you don't have to re-type anything. Be sure to modify the quantities when you do that.

The 2nd spreadsheet should also be divided into short-term vs. long term gains or losses, which is easily done when you do your cut & paste. Over time, you can set up a nice system that keeps everything straight, and it is a great reference at your fingertips.

tneig

I thought it would sure be nice to get a basic spreadsheet to start with. So I went to look around the web a bit.
Here are some examples. Just some stuff that is out there. I think the 3rd item below is a spreadsheet that links directly to kitco.
I'll just use some of this to make my own, where I would set any or no linking of my own.

One reference was to use quicken.

pic 1 of spreadsheet

gold spreadsheet pic

Link to spreadsheet

more links

piecesofme

If everything you did was thru PP gift, payment owed or regular...wouldn't your archived statements suffice?

The spreadsheet thing would be needed for non- Paypal/credit card/debit card thru your Bank purchases, basically all of your cash purchases, right?

Not to muddy the water, but what is needed for sales? Someone awhile back said something like sales <$10k/year nothing is required. Is that correct?

derryb

all income from sales is required to be reported to the IRS (I treat them as capital gains/losses) even if sold at a loss. Purpose of the records/spreadsheet is for one to keep track of cost, purchase date, sell price, sell date, selling expenses including shipping for when it is time to fill out the tax forms. You may hold them for years before selling and records come in handy at that time.

I built my own spreadsheets with excel. One for purchases (inventory), one for completed sales. When I make a sale I complete the line items and then cut and paste it to the current year sales sheet. At tax time I have excel arrange the sales by purchase date (auto feature). I compare purchase date to sale date to determine if short or long term.

piecesofme

all income from sales is required to be reported to the IRS (I treat them as capital gains/losses) even if sold at a loss

I understand and am fully aware of that. The point was if you can show a loss, what's to worry. If you have profited, no worries there either. But in both cases, the information must be accurate and not manipulated, as some do.
What's the deal with the $10k/year thing though derryb? I know there's something out there about that if you haven't profited more than $10k, or is it if the value of all transactions that were done was >$10k you have to do something or other. I know you're the person to ask and thanks in advance.

BBN

Thanks for the replies everyone. My plan is for one 1/10 ozAGE and two ASE's every pay period for the next 25 years until I turn 67 as long as this method stays affordable. When I retire I would then cash out one or two 1/10 AGE's and two to four ASE's per month as a part of my retirement nest egg. This is why I want to have my ducks in a row.

derryb

not aware of any $10k/year thing. IRS expects all income to be reported regardless of amount. Even if you have a loss you still have income from the sale. It's up to you to show the IRS you suffered a loss on the transaction.

Wingsrule

The only requirement that I am aware of involving the $10K number is that any single cash transaction involving $10K or more (in green cash) triggers some paperwork. Does not apply if the transaction involves a check, wire transfer or cc since the transaction is documented in that way.

I was thinking about putting each one in a flip with the coin in one side and a little piece of paper noting date of purchase and cost in the other slot.

This is how I do it for loose items. And then the same data goes into the master spreadsheet.

piecesofme

Thanks for the clarification Wings. So to avoid the paperwork, do 2 $5k transactions instead of 1 $10k one

jmski52

Thanks for the clarification Wings. So to avoid the paperwork, do 2 $5k transactions instead of 1 $10k one

You may be just kidding or you may already know, but that is referred to as "structuring" and it is just as prohibited as a single $10K cash transaction.

derryb

<< <i>You may be just kidding or you may already know, but that is referred to as "structuring" and it is just as prohibited as a single $10K cash transaction. >>


Your friendly bank teller has been trained to look out for such action and can even get a reward from the IRS for helping catch tax cheaters. Banks are required to report suspected structuring or any deposit of any amount they deem suspicious for the account. A teller has nothing to lose by reporting suspected tax cheats and a lot to gain if the IRS catches one.


also keep in mind that bank deposits are not under the radar. Any electronic transfer of money either into or out of an account of any type is no more secret than a retired General's email. Not worth the risk to me.

Coyn

Also know that banks are required to report safe deposit access that correlates to cashin or cash out of an account at the same time. Just think of your local bank as an IRS collection office and act accordingly.

jmski52

Also know that banks are required to report safe deposit access that correlates to cashin or cash out of an account at the same time. Just think of your local bank as an IRS collection office and act accordingly.

I didn't know that, but it figures.

derryb

<< <i>Also know that banks are required to report safe deposit access that correlates to cashin or cash out of an account at the same time. Just think of your local bank as an IRS collection office and act accordingly. >>


My neighbor the head teller at a local BOA says she has never heard of this. Just passing on what I was told.

piecesofme

Didn't anyone pay attention to the at the end of my comment? Once again I have to ask, please read everything that is said. Sometimes it takes a paragraph to get a point across, not just a one line zinger like so many like to try and do. Kind of like saying silver would never get above $30 ever again

Vintageismygame

<< <i>Also know that banks are required to report safe deposit access that correlates to cashin or cash out of an account at the same time. Just think of your local bank as an IRS collection office and act accordingly. >>




Solution = Account at 1 bank, SD Box at another.

jmski52

In my experience, can mean just about anything

derryb

We need a "thick skin" icon.

Coyn

<< <i>My neighbor the head teller at a local BOA says she has never heard of this. Just passing on what I was told. >>



Theres a lot of things that happen in a bank not everyone who works there knows about.

Every bank has a "BSA officer , thats a Bank Secrecy Act Officer. Safe deposit access is reported to them. They also have access to account records, deposits etc.

Ask her if she knows what an OFAC list is or a SAR. These are known little outside of the upper levels of the bank, where i lived. The banks are the watchdogs for many governement agencies. A lot or reporting goes on.

Spooly

Banks are government lap dogs? Governments are lap dogs for the Banks? Either way you get screwed.

piecesofme

We need a "thick skin" icon.

We need an icon that depicts someone being fed up with both arms in the air and pushing them away from their body as if they were walking away and saying eehhhh, screw it!