Gifts Vs. Entertainment Expenses

Discussion in 'US Taxes' started by Tax Tip, Oct 17, 2008.

  1. Tax Tip

    Tax Tip Guest

    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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    Tax Tip, Oct 17, 2008
    #1
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