Prizes for contests IRS: Business Expenses -- Employee Pay Prizes for contests IRS Publication 535 https://www.irs.gov/publications/p535/ch02.html deductible as a business expense reasonable compensation maximum deduction considered awards as opposed to gifts reasonable compensation Prizes for contests IRS Publication 535 Internal Revenue Service: Employees' Pay https://www.irs.gov/publications/p535/ch02.html All Types of Awards IRS: Employees' Pay pay is “reasonable” maximum deduction reasonable