Gifts Vs. Entertainment Expenses


T

Tax Tip

You can deduct up to 50% of entertainment costs, or gift costs up to
$25 each, as long as they are ordinary and necessary for your rental
investment. Any item that might be considered either a gift or
entertainment generally will be considered entertainment. However, if
you give an item that is intended to be used at a later date, treat it
as a gift.

If you give someone tickets to a theater performance or sporting event
and you do not go, you have a choice of treating the cost as either a
gift expense or an entertainment expense, whichever is to your
advantage. For example, if the tickets cost $20 you would treat it as
a gift so you could deduct the whole amount, but if the tickets were
$100 dollars then you would want to treat it as an entertainment
expense so you can write-off $50 instead of $25.

If you go with the person to the event, you must treat the cost of the
tickets as an entertainment expense and cannot treat it as a gift
expense.

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