Gift limit of $25 per person

[Gretel]

Until 1 minute ago I thought if your business gives a gift to another business this means you either give it to one person or to one person and a spouse. I realize how limited that view point was. If you give gift baskets to share with their employees or partners you easily can give $100 if it is for 5 or 6 people.

What is your experience with this?

[ATSMAN]

Watch out for the 2 exceptions below:

IRC 274(b)

(b) Gifts
(1) Limitation
No deduction shall be allowed under section 162 orsection 212 for any expense for gifts made directly or indirectly to any individual to the extent that such expense, when added to prior expenses of the taxpayer for gifts made to such individual during the same taxable year, exceeds $25. For purposes of this section, the term “gift” means any item excludable from gross income of the recipient under section 102 which is not excludable from his gross income under any other provision of this chapter, but such term does not include—
(A) an item having a cost to the taxpayer not in excess of $4.00 on which the name of the taxpayer is clearly and permanently imprinted and which is one of a number of identical items distributed generally by the taxpayer, or
(B) a sign, display rack, or other promotional material to be used on the business premises of the recipient.
(2) Special rules
(A) In the case of a gift by a partnership, the limitation contained in paragraph (1) shall apply to the partnership as well as to each member thereof.
(B) For purposes of paragraph (1), a husband and wife shall be treated as one taxpayer.

[New York Enrolled Agent]

Until 1 minute ago I thought if your business gives a gift to another business this means you either give it to one person or to one person and a spouse. I realize how limited that view point was. If you give gift baskets to share with their employees or partners you easily can give $100 if it is for 5 or 6 people.

What is your experience with this?

I think it would be worthwhile to check out Reg. §1.274-3. I think it address what you're asking about in giving gifts to a company for redistribution. The $25 rule limitation is for a gift made directly or indirectly to an individual.

(2) Gift to corporation or other business entity.

If a taxpayer makes a gift to a corporation or other business entity intended for the eventual personal use or benefit of an individual who is an employee, stockholder, or other owner of the corporation or business entity, the gift generally will be considered as made indirectly to such individual. Thus, if a taxpayer provides theater tickets to a closely held corporation for eventual use by any one of the stockholders of the corporation, and if such tickets are gifts, the gifts will be considered as made indirectly to the individual who eventually uses such ticket. On the other hand, a gift to a business organization of property to be used in connection with the business of the organization (for example, a technical manual) will not be considered as a gift to an individual, even though, in practice, the book will be used principally by a readily identifiable individual employee. A gift for the eventual personal use or benefit of some undesignated member of a large group of individuals generally will not be considered as made indirectly to the individual who eventually uses, or benefits from, such gifts unless, under the circumstances of the case, it is reasonably practicable for the taxpayer to ascertain the ultimate recipient of the gift. Thus, if a taxpayer provides several baseball tickets to a corporation for the eventual use by any one of a large number of employees or customers of the corporation, and if such tickets are gifts, the gifts generally will not be treated as made indirectly to the individuals who use such tickets.

[Gretel]

Thank you so much to both of you. That is very helpful. It was on my list to look closer at regs.