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Old 01-11-2013, 06:56 PM   #59 (permalink)
Join Date: Aug 2012
Posts: 372

I buy a lot of private collections and of course I pay with cash. The seller would never trust me with a check bec they don't know me. If I would be audited what would I need to prove that I spent the money? It is hard to get reciepts from people that I am paying cash to. Could I keep my own records like write my own receipt or keep it in a note book? Would the IRS accept that? I do have the bank statements that show cash withdrawals, does that help? Thanks
Whenever possible, get a receipt. It sounds to me that you know up front the cash value of your purchase and withdraw just that amount from the bank each time. If you do not receive a receipt, I would write on the withdrawal slip the contents of the purchase as the slip would already contain the date and amount of the purchase. In absence of those, I would write your own receipts for your records and keep any other form of proof you can obtain that would also document the purchase.

I've always heard "postmarked by January 31". Not sure where this end-of-February stuff came from.
I have this backwards in the OP. The 1099, much like your W-2, has to be postmarked to the recipient by January 31st. The IRS's copy is not due until February 28th. I would still wait to the end of February if you believe you should receive one as some preparation may be delinquent.

When I get some more time, I will update the OP for the additional questions in this thread.
HoustonCPA is offline   Reply With Quote