Nancy owns a small dress store. During the year, Nancy gives business gifts having the indicated cost to the following individuals: $$\begin{array} { l l }
\text { Mrs. Johns (a customer) } & \$ 37 \text { plus } \$ 3 \text { shipping } \
\text { Mr. Johns (nonclient husband of Mrs. Johns) } & \$ 10 \
\text { Ms. B rown (a customer) } & \$ 22
\end{array}$$ What is the amount of Nancy's deduction for business gifts?

Question

Nancy owns a small dress store. During the year, Nancy gives business gifts having the indicated cost to the following individuals: $$\begin{array} { l l } 
\text { Mrs. Johns (a customer) } & \$ 37 \text { plus } \$ 3 \text { shipping } \
\text { Mr. Johns (nonclient husband of Mrs. Johns) } & \$ 10 \
\text { Ms. B rown (a customer) } & \$ 22
\end{array}$$ What is the amount of Nancy's deduction for business gifts?

Quizplus · Accepted Answer

The IRS allows a deduction of up to $25 per recipient for business gifts. Nancy can deduct $25 for Mrs. Johns and $22 for Ms. Brown, totaling $47. The $10 gift to Mr. Johns is not deductible as it exceeds the $25 limit when combined with Mrs. Johns' gift. Shipping costs are included in the gift cost, so the total deductible amount is $50.

Nancy Owns a Small Dress Store What Is the Amount of Nancy's Deduction for Business Gifts