Making gifts to promote your business is complicated. The information below was provided to us from Bradford Tax Institute.
To stay in touch and promote my business, I buy dozens and dozens of Starbucks $5 gift cards and send them monthly to my prospects and referral sources. Can I write off the $5 cards
You’ve probably heard the expression “between a rock and a hard place.” That’s where your Starbucks gift cards fall. The law is going to treat your $5 Starbucks cards as business gifts.
Thus, if you give a card to a referral source every month, your cost is $60 for the year ($5 x 12), but you may not deduct more than $25 for business gifts made to the same person.
When you see the $4 exception to the gift rules, you will want to eat nails. The law exempts from the business gift rules and calls it advertising when you give to a customer or a prospect an item.
Keep in mind that the $4 rule was enacted in 1962, many years before Starbucks came into being. Further, if we applied the consumer price index calculator to that $4 amount, it would inflate to $39 today. The $25 total gift amount inflates to $241.
You might consider the complaint route. Both the $4 and $25 limits are out of touch and absurd. They need changes to account for inflation and changes in society. People who deserve your complaints include your
June 9, 2022 | DWHuff Consulting
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