An employee gives a customer a gift of two tickets to a Broadway show costing $200. The employee does not accompany the customer. What is the maximum deduction?
a. Incorrect. $4 is the dollar limit on small items that are exempt from the usual business gift dollar limit.
b. Incorrect. The dollar limit on business gifts of $25 need not be used here to claim the maximum deduction.
c. Correct. The employee can choose to treat the tickets as an entertainment expense subject to the 50% limit, so the maximum deduction is $100.
d. Incorrect. The full amount of the $200 is not deductible whether the employee treats the tickets as a gift or an entertainment expense.