Evening star. [volume] (Washington, D.C.) 1854-1972, 1963-08-11
Fifth in a series)


Fifth in a series)
This covers business gifts
which you make to your Gus
toners, your business associ-
ates, your clients, your employees
Except that the employe limit
is 500 for gifts recognizing
length of service or safety
achievements and any others
for whom you could properly
deduct business gifts.
This will not prevent you
from making gifts as large as
you wish, but it limits your
income tax deduction to no
more than $25 for each person
to whom you make business
gifts during the year.
The SIS limit is figured by
what the gift costs you, not
what it's worth to the person
to whom you give it.
Omit Other Changes
You can omit from your cost
any Incidental" charges-such
as the customary engraving on
jewelry, or packaging, insur-
ance, mailing or other deliv-
cry. For instance, if you pay
$25 for the gift, another dollar
for engraving and another dol
lar for packaging and mailing,
you will be able to deduct the
entire sgt by treating SIS as
the business gift and the other
81 as otherwise .deductible ex-
penseS.
But a cost will not be con-
sidered Incidental" if it adds
substantial value to the gift.
Thus, what you pay for GUS
tomary gift wrapping may be
excluded from the gift as an
incidental cost. But suppose
you buy $40 worth of fruit as
a gift and have it packaged in
a $40 basket for delivery. The
Treasury will most probably
consider the packaging no
longer incidental and treat the
combined fruit and basket as
a $40 gift for which you can
take only a $25 deduction, with
no deduction for the other SIS.
Here are several special re-
minders about the new busi-
ness gift rules.
You can make more than
one gift to a person in a year
but the total amount you can
deduct for that one persons
gifts can't exceed $25.
2-You can't get around the
$25 limit per person by max
ing your gift to the persons
husband or wife or child. II
you want to give your customer
a $3.50 refrigerator as a bust
ness gift. say, you can't beat
the SIS limit on your deduc-
ton by giving the refrigerator
to his wife instead Of directly
to him. But if your customers
wife is actually in partnership
with him in his business, you
can make a gift to either one
or both and you will get a
separate $25 deduction for each
one, for a total Of $50.
Illustration Offered
ST you have business con-
nections who own and operate
other businesses as corpora
tons, you can't get around the
new $25 a year limit on gifts
to individuals by making your
gift to their corporations. To
illustrate, If you give a $4,000
car as a gift to your business
customers corpoation for even
tual personal use by your Gus
toner himself, your deduction
is limited to $25 even though
your gift is made in form tc
a corporation rather than ar
individual.
4ESome gifts may fit the
descriptions Of both business
entertainment and business
gifts. Depending on the par
ticular situation, the new rules
may at times give you a better
tax break by treating the gift
one way rather than the other
AS an example, when yoU
give theatre tickets to a Gus
toner whom you don't accom-
pany to the theatre, the Treas.
ury gives you the choice o.
treating the tickets as a bust.
ness gift or entertainment
While you may be unable tc
meet the tests for deductinf
the tickets as entertainment
you easily may show that they
are deductible business gifts
So you would choose to treat
them as business gifts, al
though that would limit YOU
deduction to SIS.
When you make a business
gift to an individual of pack.
aged food or beverages for con.
sumption at a later time, you
have no choice about treatinl
this as an entertainment or q
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