Ronald and Sue M. Leschke - Page 1

                                 T.C. Memo. 2001-18                                   

                               UNITED STATES TAX COURT                                

                      RONALD AND SUE M. LESCHKE, Petitioners v.                       
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 4301-99.                  Filed January 26, 2001.           

                    R determined that Ps were liable for income tax                   
               deficiencies based on the disallowance of amounts                      
               claimed as business expense deductions by an S                         
               corporation wholly owned by P husband.                                 
                    Held:  Amounts used to purchase gift certificates                 
               for corporate customers are deductible only to the                     
               extent of the $25 limitation set forth in sec. 274(b),                 
                    Held, further, sums paid for gift nut baskets                     
               given to employees are fully deductible pursuant to the                
               language of secs. 102(c) and 274(b), I.R.C.                            
                    Held, further, $100 bills given to employees as                   
               Christmas bonuses are fully deductible as compensation.                
               Richard A. Frederick, for petitioners.                                 
               Christa A. Gruber and Mark J. Miller, for respondent.                  

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