DEDUCTION OF BUSINESS GIFTS
The Long & the Short of It – In any one calendar year you are allowed to give business gifts of $25 per person. Note also that gifts to, say a client’s wife, are imputed to that client. Also, if you and your wife are in business together, the $25 limit is shared by both you on a per client basis.
In the “not gifts” category are those free pens with the company name and logo. (That is as long as the pens don’t cost you more than $4.00.)
Also note that any item that can be considered either a gift or entertainment, is generally considered as entertainment and subject to the 50% rule.
If you give a customer tickets to an event it can be treated as either entertainment or a gift. If you take a customer to an event, it is considered entertainment and subject to the 50% rule.
When is a gift not a gift? Answer, when it’s Advertising and Promotion. Example – trade show give away items.
