46. PR.03-17Problem 3-17Business Gifts (LO 3.9)Sam owns an insurance agency and makes the following business gifts during the year.Calculate Sam's deduction for business gifts.If an amount is zero, enter "0".AmountAllowedAmountDonee$35, plus $4 shipping $1. Ms. Sears (a client)y2. Mr. Williams (a tennis partner,55not a business prospect or client)3. Mr. Sample (a client) and22Mrs. Sample (nonclient wife of Mr. Sample)$204. Various customers (calendars300costing $3 each with the company name on them)5. Mr. Shiver (an employee gift,175a watch, for 25 years of continuous service)Total business gift deductiontftfrtALO

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Asked Sep 7, 2019
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46. PR.03-17
Problem 3-17
Business Gifts (LO 3.9)
Sam owns an insurance agency and makes the following business gifts during the year.
Calculate Sam's deduction for business gifts.
If an amount is zero, enter "0".
Amount
Allowed
Amount
Donee
$35, plus $4 shipping $
1. Ms. Sears (a client)
y
2. Mr. Williams (a tennis partner,
55
not a business prospect or client)
3. Mr. Sample (a client) and
22
Mrs. Sample (nonclient wife of Mr. Sample)
$
20
4. Various customers (calendars
300
costing $3 each with the company name on them)
5. Mr. Shiver (an employee gift,
175
a watch, for 25 years of continuous service)
Total business gift deduction
tf
tfr
tA
LO
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46. PR.03-17 Problem 3-17 Business Gifts (LO 3.9) Sam owns an insurance agency and makes the following business gifts during the year. Calculate Sam's deduction for business gifts. If an amount is zero, enter "0". Amount Allowed Amount Donee $35, plus $4 shipping $ 1. Ms. Sears (a client) y 2. Mr. Williams (a tennis partner, 55 not a business prospect or client) 3. Mr. Sample (a client) and 22 Mrs. Sample (nonclient wife of Mr. Sample) $ 20 4. Various customers (calendars 300 costing $3 each with the company name on them) 5. Mr. Shiver (an employee gift, 175 a watch, for 25 years of continuous service) Total business gift deduction tf tfr tA LO

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Expert Answer

Step 1

A taxpayer can claim deduction on all or part of the cost of business gifts that are given in the course of trade and business. In order to receive the deduction, certain conditions are to be fulfilled:

(a)    The taxpayer can deduct a maximum of $25 of the cost of business gift given directly or indirectly to each person.

(b)    Incidental cost of packing or shipping is not included in the limit of $25 if they do not add value to the gift given.

(c)     Gifts costing $4 or les...

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