Gifts you give to business associates are deductible up to $25 if you can

show a business purpose for the expense or business benefit to be

gained. (Married couples count as one person for this rule—you can’t

deduct $25 for each.) This includes family and friends if they qualify as

bona fide clients, prospects, or referral sources. Gifts are nontaxable to

the recipient.

• If you give gifts of entertainment or sporting tickets, you can choose to

deduct up to $25 as a gift, or 50% of the cost as an entertainment

expense. If tickets you give cost more than $50, you’ll save more by

counting them as entertainment.

• If you give a gift to a group of recipients, such as a family or an office,

you can deduct $25 for each member of the group.

• Ad specialties with a value up to $4 each are deductible as advertising

and don’t count against the $25 per person annual limit for business

gifts. Contest prizes you give to customers (but not employees) also

qualify.