1120S Gift

[JG EA]

This is a very simple question - just to make sure.

If a shareholder in an S-Corp gives a $100 gift to a customer, does the $75 go in non-deductible status? That is what I've been doing...

[Gary2]

This is a very simple question - just to make sure.

If a shareholder in an S-Corp gives a $100 gift to a customer, does the $75 go in non-deductible status? That is what I've been doing...

Why wouldn't it be $100 that's non-deductible? Wouldn't the S-Corp need to have a reimbursement policy to consider this a business expense?

[S T]

Gifts In course of trade or business

See Pub 463

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. A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift.

JG - This is also what I do is to limit gifts to Customers to $25 per customer per year.

Sandy

[JG EA]

Why wouldn't it be $100 that's non-deductible? Wouldn't the S-Corp need to have a reimbursement policy to consider this a business expense?

I must remember to be more precise. Yes, it was written on a corporation check by the shareholder which didn't really matter in my question.

JG - This is also what I do is to limit gifts to Customers to $25 per customer per year.

Sandy

Thanks!

[oceanlovin'ea]

s corps too?

I know that rule applies to Schedule C proprietors but does it also apply to S corps and corps? Could not it be written into the minutes that the amount of gifts could be higher?

Linda, EA

[Lion]

Biz

Any business can decide to give gifts of any amount that is legal, so that higher amount is on its books. But, it can deduct only $25 per client per year on its tax return. I think the OP was trying to find out how to account for the excess gifts, I think on the tax return.

[Gary2]

I must remember to be more precise. Yes, it was written on a corporation check by the shareholder which didn't really matter in my question.

Oops, sorry. I think it's the fact that it was a shareholder that didn't matter. "An S-Corp gave a $100 gift to a customer..." is good enough.

I've been struggling with how to advise people to be precise without being wordy, but can't find any good way other than being wordy myself, with lots of examples.

[JohnH]

How about this?

"The difference between the almost right word & the right word is really a large matter -- it's the difference between the lightning bug and the lightning."

- Mark Twain, in a letter to George Bainton, 10/15/1888

[JG EA]

How about this?

"The difference between the almost right word & the right word is really a large matter -- it's the difference between the lightning bug and the lightning."

- Mark Twain, in a letter to George Bainton, 10/15/1888

Yeah. I always thought I had a good command of the English language. Boy was I wrong. I learned years ago on this board that if people do not understand what I say - then I didn't say it well. I tried then to become clearer in words, but it depends on the state of mind at the time. When I am panicked - well things come out like “lightning”.