If you give business gifts in the course of your trade or business, you can deduct all or part of the costs subject to the following limitations:
- You deduct no more than $25 of the cost of business gifts you give directly or indirectly to each person during your tax year.
- If you and your spouse both give gifts to the same person, both of you are treated as one taxpayer.
- Incidental costs such as engraving, packing or shipping aren’t included in the $25 limit if they don’t add substantial value to the gift.
- For purposes of the $25 per person limit, don’t consider gifts costing $4.00 or less that have your business name permanently engraved on the item and which you distribute on a regular basis.
- Any item that could be considered either a gift or as entertainment is generally considered entertainment and cannot be deducted.
- You need to have records that prove the business purpose of the gift as well as the details of the amount spent.
Riolene Ibok, CPA, MBA ACCOUNTING & TAX ADVISORY GROUP
555 North Point Center East, Suite 400 Atlanta, GA 30022 O: 678.697.2229 F: 678.264.5565
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