Gifts Employees

[BOB W]

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.

I guess a W-2 employee could have a trade, but not a business. Stat.Employee excluded.

In order for an employer to give a Xmas bonus, that bonus needs to be added to the employee's W-2. An Employee does not issue W-2 bonuses. In my readings I found that a supervisor can redirect some of his/her earnings to a subordinate so that it will show on the W-2 of the subordinate.

If we are only talking about $25 max xmas gifts ( non W-2 type), I still think it is personal not an employee trade deduction.

[Davc]

For those contending that being an employee is not a business, two thoughts:

1. What is the title of the 2103?

2. Employee business expense is considered a business deduction when calculating an NOL.

Context is everything.

[BOB W]

For those contending that being an employee is not a business, two thoughts:

1. What is the title of the 2103?

2. Employee business expense is considered a business deduction when calculating an NOL.

Context is everything.

Dave, not trying to split hairs but, The key word to 2106 is EMPLOYEE. Business Expenses relates to the employee being REQUIRED by the EMPLOYER to pick up some of those expenses in order to proform the employee's job, outlined by the employer in most, if not, all cases.

What many preparers put on the tax return and what IRS allows can be at odds with the IRS's allowed deductions.

[ChEAr$]

So maybe a department manager does not issue a W2 to his employee. This should not preclude the deduction for gifts up to 25$ of course. Note, not limited to $25; that's just for tax purposes.

[BOB W]

So maybe a department manager does not issue a W2 to his employee. This should not preclude the deduction for gifts up to 25$ of course. Note, not limited to $25; that's just for tax purposes.

My premise is that only employers can give a tax deductible gift of $25 or less and get a deduction on the business return. Employee's, regardless of their posistion, cannot give a tax deductible gift to another employee and get a Schedule A Misc "Business Expense Deduction.

I would be nice if Brad or NYEA would jump in with an opinion.

[JG EA]

For those contending that being an employee is not a business, two thoughts:

1. What is the title of the 2103?

2. Employee business expense is considered a business deduction when calculating an NOL.

Context is everything.

Thank you. Exactly. And on a 2106 Line 4 instructions includes Business gifts.

[Davc]

Dave, not trying to split hairs but, The key word to 2106 is EMPLOYEE. Business Expenses relates to the employee being REQUIRED by the EMPLOYER to pick up some of those expenses in order to proform the employee's job, outlined by the employer in most, if not, all cases.

What many preparers put on the tax return and what IRS allows can be at odds with the IRS's allowed deductions.

I believe you're misreading that. While an employee can't take an expense that would be reimbursed by the employer if reimbursement was applied for, there is no requirement that the employer demand the expenses be incurred.

As an example:

A company has a policy that salespeople will not be reimbursed for travel expense but allows them to stay in the office and use the internet and telephone for all their meetings. That would not preclude an salesperson from deducting travel expense to meet personally with a prospect on their 2106.

[BOB W]

I believe you're misreading that. While an employee can't take an expense that would be reimbursed by the employer if reimbursement was applied for, there is no requirement that the employer demand the expenses be incurred.

As an example:

A company has a policy that salespeople will not be reimbursed for travel expense but allows them to stay in the office and use the internet and telephone for all their meetings. That would not preclude an salesperson from deducting travel expense to meet personally with a prospect on their 2106.

I thought we were talking about Employee to Employee gifts?

[BHoffman]

We're talking about Manager payments to his staff because they were not given bonuses.

I guess my thinking is: Would the Manager still give the payment if his staff did receive their bonuses? Are other Managers doing the same thing, establishing some sort of industry standard? Does he gain any business benefit by maintaining employee morale among his staff? Would that not be a valid unreimbursed business expense? What is the difference between this act of business goodwill and the unreimbursed expense of entertaining a customer or vendor?

[Davc]

I thought we were talking about Employee to Employee gifts?

I was responding to the specific statement I quoted.

[BOB W]

I was responding to the specific statement I quoted.

OK, I'm good....We just have a difference of opinion. But I would not allow a client to get a deduction on an employee to employee gifting in the same company, regardless of the relationship.