As we get further into the holiday season, we'd like to inform you all of a little known exception to the 50% meals and entertainment limit that may help to brighten your holidays and lessen your tax burden. Expenses related to recreation, social, or similar activities incurred primarily for the benefit of employees (i.e. a company holiday party) are 100% tax deductible.
Additional deductions may be allowed for small gifts or tokens of appreciation given to employees during the holidays. The value of these gifts must be reasonable, but if they are kept to a nominal amount the business may give these gifts and claim deductions for non wage work business expenses. These gifts are deductible at 100% if they are nominal in value.
Finally, gifts given to clients and customers also have certain tax consequences. A $25 gift deduction is allowed for each client/customer each year. Gifts in excess of this amount can certainly be given, but the full cost cannot be deducted.
All information presented above is generic, if you would like to know how this may be applied to your specific situation please give us a call at 303-792-3020. Additional resources are always available at our website, www.ywmcpa.com.
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