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(c) Employee Gifts.--
(1) In general.--Subsection (a) shall not
exclude from gross income any amount transferred
by or for an employer to, or for the benefit of,
an employee.
II. Application
A. Substantiation Requirements of Sections 162 and 274(d)
As a threshold matter, we deal briefly with the question of
whether the expenditures at issue have been substantiated as
business expenses to an extent sufficient to comply with the
requirements of sections 162 and 274(d). Although respondent
makes reference on brief to a lack of substantiation, we are
satisfied that the stipulated facts and exhibits meet the
criteria imposed by these sections.
First, the distributing of gifts or bonuses to customers and
employees, particularly at Christmas, has long been accepted as
an ordinary and necessary business practice, and we refuse to
find otherwise here. See Danz v. Commissioner, 18 T.C. 454, 460,
464 (1952) (stating that bonuses described as “Christmas gifts to
employees” were ordinary and necessary expenses), affd. 231 F.2d
673 (9th Cir. 1955); Dobbe v. Commissioner, T.C. Memo. 2000-330
(holding that the cost of golf clubs given to a foreign
salesman/broker was an ordinary and necessary business expense);
Snyder v. Commissioner, T.C. Memo. 1983-692 (finding that the
cost of flowers and fruit baskets given out at Christmas time to
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