Gifts Employees

[S T]

Taxpayer who is a manager of a Dept just found out that the Employer will not be issuing Christmas Bonuses this year. Taxpayer wants to give the employees in his Dept Christmas Bonuses.

If a gift card of to Restaurant, Store, turkey/ham, tickets to an event, then T/P could deduct as a gift? What would be the dollar limit - $ 25 per ?

If amount is more than $ 25 or Cash, could it be considered a personal gift with no deduction for T/P and no income to Employee?

Sandy

[BHoffman]

De Minimis Fringe Benefit:

http://www.irs.gov/govt/fslg/article/0,,id=184791,00.html

I think this is what you might be looking for?

[appelman]

Wait a minute!

Isn't the manager himself an employee? Is he thinking of deducting gifts to fellow employees as an employee business expense? I'm not sure if that will fly! In any case, since it is not coming from the employer, it is not taxable to the recipient.

[JG EA]

Employees sure can gift business gifts. Of course they have to have enough total business expenses to make it worthwhile in the 2% category. Being a manager would qualify, especially in the scenario ST stated. He's helping his job by keeping those under him happy. I mostly see it with salesman, consultants, etc.

[BOB W]

I agree with Appleman.............No deduction...............

[appelman]

Seems weird to me!

Employees sure can gift business gifts. Of course they have to have enough total business expenses to make it worthwhile in the 2% category. Being a manager would qualify, especially in the scenario ST stated. He's helping his job by keeping those under him happy. I mostly see it with salesman, consultants, etc.

Gifts to clients or customers, ok. But to fellow employees? I dunno. Maybe, but it sure seems weird to me!

[OtisMozzetti]

Gifts to clients or customers, ok. But to fellow employees? I dunno. Maybe, but it sure seems weird to me!

I am strongly convinced that business gifts even to fellow employees, be those subordinates, bosses, or coworkers, are fair game for deduction as a business expense, subject to the usual limitations. If there were an element of "let's all give deductible 'gifts' to each other" then it could start to get shaky.

The part that troubles me more than a little bit in the case now being posted is that gift cards redeemable for goods or for meals start very much to resemble cash gifts. Gift cards redeemable for meals start to resemble meals.

EA in California, used to work with EA Appelman and Roy, Patrick, Kimberly, Jane, Jane, etc.

[Davc]

Gift cards or certificates that are redeemable for other than a specific item are treated as cash.

[BOB W]

I have done a reasonable search and can find no reason to allow an employee to get a deduction for giving a gift of any kind to another employee, even if it is supervisor to subordinate.

[ChEAr$]

I have done a reasonable search and can find no reason to allow an employee to get a deduction for giving a gift of any kind to another employee, even if it is supervisor to subordinate.

There are items mentioned in the appropriate chapter in publication 17 that are deductible; and there are things listed which are not. This is not to say that those lists are all inclusive.

Therefore, since we're talking about section 162 (right?) the test comes down to "ordinary and necessary".

[BOB W]

There are items mentioned in the appropriate chapter in publication 17 that are deductible; and there are things listed which are not. This is not to say that those lists are all inclusive.

Therefore, since we're talking about section 162 (right?) the test comes down to "ordinary and necessary".

If this issue is coming down to "Ordinary and Necessary" I believe it Fails any IRS test.

[JG EA]

Well, perhaps I am wrong. (But I like the answers by Otis and Chears best.)

My point: What is the difference here from an employee salesperson? Yes a salesperson has customers and a manager doesn't. But a manager has people who help him in his trade or business, help him to make money, help him keep his job. Obviously, with the limitations most W-2 people can't take anything for gift. But salespeople, because of travel usually are in this category more often.

Pub 463
Gifts

If you give gifts in the course of your trade or business, you can deduct all or part of the cost. This chapter explains the limits and rules for deducting the costs of gifts.
$25 limit. You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. ,,,.

It doesn't just say salespeople. And some salespeople are employees. So are you other people saying it boils down to only the "Employer" of the company can take such a deduction?

As I say I may be totally wrong, it happens often,

[BOB W]

Well, perhaps I am wrong. (But I like the answers by Otis and Chears best.)

My point: What is the difference here from an employee salesperson? Yes a salesperson has customers and a manager doesn't. But a manager has people who help him in his trade or business, help him to make money, help him keep his job. Obviously, with the limitations most W-2 people can't take anything for gift. But salespeople, because of travel usually are in this category more often.

Pub 463
Gifts


It doesn't just say salespeople. And some salespeople are employees. So are you other people saying it boils down to only the "Employer" of the company can take such a deduction?

As I say I may be totally wrong, it happens often,

I don't consider an employee as being in a trade or business. The only employee that meets a "trade or business" would be a Statutory Employee.

The only issue here is employee to employee gifts. Clients and Suppliers may fall into another catagory.

[appelman]

Aren't we talking chump change here?

Business gifts are limited to $25 per recipient. Does anybody really care?

Hi, Otis. Yep, thems was the good old days!

[ChEAr$]

trade or business for employee

Take an employee with W2 wages who also has a money losing business but bought a bunch of equipment for it subject to section 179.
His wages are income for computing any 179 limitation. So it follows that W2 wages, too, are trade or business.

(grin)

Where is my good New York Enrolled AGent buddy ?

Frank?

Don't pull any punches now, and be frank about this issue.