Let’s discuss business gifts. The IRS will only allow a business to deduct $25 per year given to any one person or ’donee’ for business gifts. If you give your clients $50 gift cards each year or a $100 bottle of wine only $25 is deductible by your business. This is also true for salesmen or any other employee who has unreimbursed business expenses that are deducted as miscellaneous itemized deductions. If you are giving away concert or sports tickets to clients and you join them at the event, this isn’t a gift, it has to be considered an entertainment expense, which is 50% deductible, which in most cases is better than $25. If you don’t go to the event with the client, you have the choice of taking the deduction as a business gift or entertainment expense.See this article below that does a pretty good job of spelling out the gift vs entertainment vs employee gift (wages) breakdown: http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P07_2640In any case, if you have questions about this, it is best to talk to me about it so we can plan ahead before you actually make the gift so we can get you the maximum deduction for your business.
Brian’s General Musings
Well here is our sports report. My friend and associate Michael Long’s beloved Auburn won the BCS national championship over Oregon Monday night (the closest thing we will get to a playoff in college football in some time – write to your nearest bowl committee or conference president and complain). Considering the offensive ability of both teams (both averaging close to 50 pts a game), the defense was outstanding. Best game since 2006 (even though my Trojans lost that one). Michael’s contact info is on my website so get in touch with him and he will tell you how great the SEC is (fortunately he is also a great financial planner). Go to: www.briantstonercpa.com/resources On a slightly more important note, last night my Lakers set a team record in LA for holding a team to 57 points (the poor Lebron-less Cavaliers), which beats the old LA record of 66 points. They only won by 55, so they have to work on that.
Brian’s Tax Musings
Just as a point of reference, the standard deduction in 2011 will be $5800 for single and $11600 for married joint, up from $5700 and $11400 in 2010. The dependency exemption (a deduction for you, your spouse and each of your dependents) will be $3700, up from $3650 in 2010. This proves that there is inflation, so why didn’t people on social security get a cost of living adjustment in 2011? It boggles the mind. The Social Security Administration must be in a different Universe (as opposed to the real world) than the rest of us.I mentioned this in an earlier post, but in case you missed it, the standard milage rates for 2011 are:Business 51 cents per mile, up from 50 cents in 2010Medical and moving 19 cents per mile, up from 16.5 cents in 2010Charitable stays at 14 cents a mile, this can’t be changed unless Congress passes a law.Last time I heard, with depreciation, insurance, maintenance, etc, it costs at least 75 cents a mile to operate a car, and that was with gas at $2.50 a gallon. Oh well, at least they didn’t lower it.