While working on the Schedule C for
a GD extension yesterday I was reminded of a major issue concerning a certain business
deduction.
According to IRS Publication 463 - Travel,
Entertainment, Gift, and Car Expenses (highlight is mine) -
“You
can deduct no more than $25 for
business gifts you give directly or indirectly to each person during your tax
year.
Incidental
costs, such as engraving on jewelry, or packaging, insuring, and mailing, are
generally not included in determining the cost of a gift for purposes of the
$25 limit.”
It seems to me that this $25.00
limit has been around as long as I have been preparing 1040s (and I began in
1972)!
Years ago the IRS began to “index
for inflation” tax credits, deductions, exclusions, and phase-outs – but this
indexing is selective and not universal. All credits, deductions, exclusions, and
phase-outs are not indexed annually for inflation. Many deductions have remained the same for
decades – for example, in addition to the $25.00 for business gifts, the $3,000
annual maximum capital loss deduction.
To be fair the selectivity of
inflation indexing is not the fault of the IRS – but, as with most problems
with the mucking fess that is the US Tax Code it is the fault of the idiots in
Congress, as the selective indexing for inflation is for the most part statutory.
If any tax returns items are going
to be indexed for inflation then ALL tax return items should be indexed for
inflation!
So what do you think?
TTFN
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