How Do You Calculate Business Gifts In Tax Deductions?
Giving a business gift is a good way to show appreciation to a client, customer, vendor or employee. It can also be a deductible expense on your tax return if you follow the IRS rules and stay within the allowable limits. In some case, however, treating the expense as a gift may not be the best way to go. Here’s how determine how to calculate business gifts Know the IRS characterization of a business gift. Generally, this means appreciation for past service or to strengthen a business relationship. If it can be considered either entertainment or a gift, the IRS classifies it as entertainment. You can give gifts to as many business associates as you wish, but there are limitations and exceptions. Recognize that the IRS places a limit of $25 on the deductability of all gifts to one recipient. This limit applies to all gifts in any tax year to the same recipient. For example, if you give a gift worth $15 to a recipient and then later give a $10 gift to the same person, the total is $25 an
