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Originally Posted by Fred
What if you don't have the purchase receipts or records for the cards you sold?
How can the IRS prove or disprove what is reported? Or will the IRS fall back on "it's up to the seller to maintain detailed records"?
What if the person or persons you bought cards from are no longer amongst the living and cannot be called upon to testify or provide a deposition to the claims a person makes about purchase price of a card or cards?
What are common triggers for an audit related to collectibles sales?
Sounds messy.
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Certainly everything in the guidance from the IRS requires good records. Gold standard is 3rd party documentation. Next step down is contemporaneous self produced documentation. Lowest level is your current recollection.
And when it comes to business audits, they definitely take a hard line around documentation for deductions. At the same time, I’ve never had the IRS attempt to challenge the gain calculation for an asset acquired decades earlier, so I’ve never seen that element play out.
A lot will probably come down to how tough the agent wants to play. And also how large the amounts are. If it’s a $10 purchase from 30 years ago, you might just be okay. If it’s 6 figures, they might not be so willing to let it slide just on your word.