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Originally Posted by Exhibitman
First of all I have dealt with IRS and state auditors. You do not need paper proof to prove basis. Testimony is evidence. I've had clients face down the IRS with direct testimony. I paid $500 for a Warren Spahn card that I sell for $1,000 on eBay and I get a 1099, I report it as such and that will stand up in a court or in an audit. The only things you absolutely must have receipts to prove on your personal return are charitable deductions.
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Why should one not worry about the situation you are describing where deducting basis from the revenue shown on the 1099 triggers an audit and forces one to pay an attorney and testify to prove one's innocence? That sounds like a nightmare. Except for the attorney.