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deduction to be allowable. Among items within the purview of
section 274 are traveling expenses, entertainment expenses, “any
expense for gifts”, and expenses with respect to listed property
(as defined in section 280F(d)(4)). Sec. 274(d). Accordingly,
no deduction is allowed for gifts “unless the taxpayer
substantiates by adequate records or by sufficient evidence
corroborating the taxpayer’s own statement” the amount of the
expense, the date and description of the gift, the business
purpose of the expense, and the business relationship to the
person receiving the gift. Id. Moreover, the available
deduction for even a properly substantiated business gift may be
further limited if the gift is of a type subject to the
provisions of section 274(b), set forth in relevant part below:
SEC. 274(b). Gifts.--
(1) Limitation.--No deduction shall be
allowed under section 162 or section 212 for any
expense for gifts made directly or indirectly to
any individual to the extent that such expense,
when added to prior expenses of the taxpayer for
gifts made to such individual during the same
taxable year, exceeds $25. For purposes of this
section, the term “gift” means any item excludable
from gross income of the recipient under section
102 which is not excludable from his gross income
under any other provision of this chapter * * *
Section 102, in turn, reads as follows:
SEC. 102. GIFTS AND INHERITANCES.
(a) General Rule.--Gross income does not include
the value of property acquired by gift, bequest,
devise, or inheritance.
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Last modified: May 25, 2011