Starbucks Gift Cards for Business Promotion

Question

To stay in touch and promote my business, I buy dozens and dozens of Starbucks $5 gift cards and send them monthly to my prospects and referral sources. Can I write off the $5 cards?

$25 Limit

You’ve probably heard the expression “between a rock and a hard place.” That’s where your Starbucks gift cards fall. The law is going to treat your $5 Starbucks cards as business gifts.

Thus, if you give a card to a referral source every month, your cost is $60 for the year ($5 x 12), but you may not deduct more than $25 for business gifts made to the same person.

$4 Exception

When you see the $4 exception to the gift rules, you will want to eat nails. The law exempts from the business gift rules and calls it advertising when you give to a customer or a prospect an item…

• That costs you $4 or less,
• On which you have your name clearly and permanently imprinted, and
• That is one of a number of identical items distributed generally by you.

In?ation

Keep in mind that the $4 rule was enacted in 1962,2 many years before Starbucks came into being. Further, if we applied the consumer price index calculator to that $4 amount, it would in?ate to $39 today. The $25 total gift amount in?ates to $241.

Complaint Route

You might consider the complaint route.?Both the $4 and $25 limits are out of touch and absurd. They need changes to account for in?ation and changes in society. People who deserve your complaints include your

• U.S. senators,
• U. S. congressional representatives, and
• Trade associations.

I didn’t mean for this article to be a “Rant” but I think it might be high time to make some changes to something that was established in 1962 and is way outdated. This was way before Starbucks ever came into being as well as many other popular Brands that provide easy and convent ways to say “Thank You”.

If you would like to discuss other ways to say “Thank You” to those who you wish to acknowledge and or to maximize your business gift situation, please contact us at Morris + D’Angelo. This is our Expertise!

At Morris + D’Angelo, we believe that Tax Optimization is one of the most empowering and responsible things you can do to protect your growing financial assets. Tax optimization looks at a multi-year approach to minimizing tax costs. Tax avoidance is integral to tax optimization.