Gift Giving Limit to Other Agents?

Dec 30, 2015

  1. AgentStone
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    AgentStone Super Genius

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    "You can’t pay anything to anyone for the production of business unless that entity or individual is licensed as an insurance agent."

    Given that, I receive referrals from several licensed agents through the year. They do not expect monetary compensation. I want to send them a gift (as a thank you) and wonder if there is a limit to how much I can spend and write off on taxes.
     
  2. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    I think the limit would be $600 before you might have to issue a 1099 for the gift. I bet that's why there are a lot of 'iPad' sales giveaways because it falls within these limits. Of course, the purchase is still deductible as a business expense.

    Of course, technically this is a tax question, and I don't give tax advice.
     
    DHK, Dec 30, 2015
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  3. MW Agent
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    As a general rule: Gift deduction = $25. Not tax advise, do your own research.
     
    MW Agent, Dec 30, 2015
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  4. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    DHK, Dec 30, 2015
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  5. AgentStone
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    AgentStone Super Genius

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    I did find https://www.irs.gov/publications/p463/ch03.html before I posted here. What is stated is basically gifts to clients. Understood… $25 limit.

    What is not addressed clearly is business to business with no client relationship. My gifts are to P&C companies and financial advisors (referrals from many people in each business) not to an individual.



    3. Gifts
    Table of Contents
    If you give gifts in the course of your trade or business, you can deduct all or part of the cost. This chapter explains the limits and rules for deducting the costs of gifts.
    $25 limit. You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift.
    If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use.
    If you and your spouse both give gifts, both of you are treated as one taxpayer. It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. If a partnership gives gifts, the partnership and the partners are treated as one taxpayer.


    I would go with the IRS ruling on any topic but they were not clear on business to business gifts with no client relationship. I found some other info that said there wasn’t a limit (and no, I don’t believe everything I read on the internet…is why I polled this site).

    What Makes an Appropriate


    Be Mindful of Tax Implications
    Tax consultant and CPA Ron Evans notes that the maximum allowable deduction for business gifts is $25 per person, per year. The $25 limit applies to individuals and not an entire business.
    "If one business gives a gift to another business, the $25 limit does not apply, but the business gift must be for the enjoyment of the entire business, not for one person in that business," says Evans. "For example, if a client is celebrating an anniversary and you give them a fruit basket for the company to enjoy, then the $25 limit does not apply. But if you gave it to the owner for his enjoyment, that would be subject to the $25 limit."

    Gifts can be deductible business expenses, but IRS limits are strict |*Inman

    Company-wide gifts
    The $25 limit applies only to gifts to individuals. It doesn’t apply if you give a gift to an entire company, unless the gift is intended for a particular person or group of people within the company such as the president or manager). Such company-wide gifts are deductible in any amount, as long as they are reasonable.
    Example: Bob, is a commercial real estate broker whose best client is Acme Inc. Just before Christmas, he drops off a $100 cheese basket at the company’s reception area for all of Acme’s employees. He also delivers an identical basket to Acme’s president. The first basket left in the reception area is a company-wide gift, not subject to the $25 limit. The basket for Acme’s president is a personal gift and therefore is subject to the limit.
     
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