Keep Factually independent
Whether you agree or disagree with our analysis, these conversations matter for democracy. We don't take money from political groups - even a $5 donation helps us keep it that way.
What recordkeeping and audit best practices should buyers and sellers of gold follow to demonstrate tax compliance?
Executive summary
Buyers and sellers of gold should keep detailed purchase and sale records, track cost basis (including premiums and storage), and cooperate with dealer reporting obligations such as Form 1099‑B and Form 8300 to reduce audit risk and prove tax compliance [1] [2] [3]. Dealers and custodians are expected to run transaction verification, cash‑reporting and periodic audits—best practices include physical inventory checks, independent verification and retaining third‑party audit trails [4] [5].
1. Keep an auditable transaction trail: invoices, provenance, and cost basis
Document every acquisition and disposition with dated invoices showing quantity, weight, unit price, dealer premium, shipping, insurance and storage costs so you can establish cost basis and taxable gain; tax guides and accounting firms explicitly say cost basis includes purchase price plus premiums and storage fees and that this reduces taxable gain on sale [1] [6].
2. Know which third‑party reports may exist and reconcile them
Many sales are corroborated by dealer or broker reporting (e.g., Form 1099‑B for reportable transactions and Form 8300 for large cash receipts), and mismatches between third‑party filings and your return are common audit triggers—dealers and educational guides note these forms and recommend reconciling your records to any 1099‑B or 8300 you receive [3] [2] [7].
3. Apply industry audit and inventory controls if you’re a dealer or custodian
Best practice for dealers, refiners and vaults combines rigorous transaction verification, routine physical inventory, dual‑control access, strong security and independent audits—consulting firms and industry guides recommend these measures to prevent fraud and to produce defensible records in regulatory or tax reviews [4] [8] [5].
4. Retain documentary proof beyond receipts: assay, serials, and chain‑of‑custody
Where available, keep assays, bar serial numbers, certificates of authenticity and chain‑of‑custody paperwork; responsible‑sourcing guides and LBMA‑style verification programs emphasise independent verification and traceability as market‑standard documentation that supports both tax and compliance enquiries [5].
5. Understand special tax classifications and how they affect reporting
Physical bullion and many coins are treated as collectibles for U.S. tax purposes (affecting capital‑gains rates), while ETFs and some funds have different structures and tax treatments; educational tax pieces stress distinguishing asset types when preparing returns [9] [10].
6. Use professional advisers and auditors for complex situations
When transactions involve partnerships (K‑1s), IRAs, international sales or new VAT regimes (notably China’s 2025 VAT changes), tax and audit complexity rises; reporters and advisers recommend engaging CPAs, enrolled agents or qualified auditors to structure records and respond to inquiries [10] [11] [6].
7. Special operational rules that raise scrutiny: large cash, frequent trading, and dealer reporting obligations
Federal rules require dealers to report large cash payments and certain customer transactions; industry advisories recommend automated recordkeeping and prompt filing to avoid penalties and to demonstrate compliance if regulators inquire [3] [2] [7].
8. International and jurisdictional changes can alter recordkeeping needs
Recent policy shifts—such as China’s November 2025 VAT reforms—show that tax regimes change and can add reporting or cost documentation requirements for cross‑border sellers and buyers; market analyses urge parties to monitor local rules and retain VAT‑relevant receipts and exchange documentation [11] [12] [13].
9. Prepare for audits: be proactive, not reactive
Audit best practice guidance for both private custodians and national debates about reserve audits recommends regular independent verification, clear record retention policies, and the ability to produce full transactional histories and access logs on request—these are the same habits that limit exposure in taxpayer audits [4] [14] [15].
10. Limitations and open questions in available reporting
Available sources cover U.S. dealer reporting (1099‑B, Form 8300), cost‑basis treatment and industry audit practices but do not provide a single statutory checklist of retention periods or a jurisdiction‑by‑jurisdiction template; for gaps such as exact record retention years or delegated audit checklists, consult a tax professional or regulator because available sources do not mention a definitive, universal retention schedule [1] [2] [4].
If you want, I can convert these practices into a checklist tailored for (a) an individual private investor, (b) a dealer/vault operator, or (c) cross‑border sellers — tell me which and I’ll produce a practical, source‑linked checklist.