What documentation should buyers and sellers keep for IRS compliance when trading gold or silver privately?
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Executive summary
Private trades of gold and silver require careful documentation because dealers must file Form 1099‑B for certain sales and Form 8300 for large cash payments, and taxpayers must support cost basis and timing for capital gains reporting on Schedule D; keeping clear receipts, identity records, and item specifications is the practical way to stay compliant [1][2][3].
1. What federal forms drive the recordkeeping obligation
Dealers use Form 1099‑B to report proceeds when a customer sells “reportable” bullion items in the quantities or specifications that the IRS and CFTC tie to regulated contracts, and they must file Form 8300 to report any single (or related) cash payments over $10,000, so buyers and sellers should keep any documents that would appear on those returns [1][2][4].
2. Receipts and invoices: the core proof of purchase and sale
A complete sales invoice or private‑sale receipt showing date, parties, description of the metal (type, weight, purity, serial numbers if any), unit price and total proceeds, and method of payment is the baseline documentation to substantiate cost basis and proceeds in the event of an IRS inquiry [5][6][3].
3. Provenance, serial numbers and product specs that affect reportability
Because the IRS’s reportable‑items list treats specific coins and bars differently (for example, 1‑kg .995+ gold bars or certain 1‑oz coins have distinct thresholds while American Eagles and many fractional pieces may be excluded), keep manufacturer/brand, fineness, weight and bar/coin serial numbers or lot IDs to prove whether a transaction met the reportable thresholds [5][6][4].
4. Payment records and identification for cash‑heavy deals
Any payment evidence—bank transfers, canceled checks, cashier’s checks, money orders or documented cash receipts—matters because Form 8300 rules apply to cash and cash‑equivalents over $10,000 in one or related transactions; dealers often collect ID, so private sellers should retain copies of ID they relied on and any written agreement about aggregation of related sales within 24 hours [4][7][8].
5. Cost basis, fees and supporting documents for tax returns
To calculate collectible capital gains (which can be taxed at a higher long‑term rate), retain original purchase invoices, dealer premiums, shipping and insurance receipts, appraisal fees and storage costs—items the IRS recognizes as part of cost basis—so gains or losses can be reported accurately on Schedule D/Form 1040 [3][9].
6. Private‑party trades: written contracts and contemporaneous notes
When trading outside dealers, a written bill of sale that includes the same itemized details—weight, purity, price, date, buyer and seller contact info—and contemporaneous notes about why the price was set will be the taxpayer’s best defense if the dealer later files a 1099‑B or the IRS questions unreported income [9][10].
7. What dealers will likely report and what they often won’t
Dealers’ public guidance shows they will file 1099‑B for sales of items on the IRS reportable list when quantities meet the thresholds (e.g., 25 certain 1‑oz coins or kilo bars) and will file Form 8300 for large cash, but many common bullion products—American Eagles, fractional coins and non‑standard bars—are often treated as non‑reportable by dealers, making documentation of product type critical [5][4][10].
8. Disputes, audits and limits of available guidance
IRS and dealer materials leave interpretive gaps—Revenue Procedure guidance is sparse, CFTC contract specs matter, and dealers’ thresholds can vary—so documentation is both insurance and a workaround for ambiguity; where sources disagree about whether particular modern coins or odd weights trigger 1099‑B filing, taxpayers should preserve full transaction records and consult a tax professional rather than rely on marketing claims [8][1][11].