Is that a gift to a specific person? charity? gift to customers or prospective customers?
you - you may deduct qualified business related expenses on the schedule C - http://www.irs.gov/pub/irs-pdf/f1040sc.pdf and calculate your net income.
You may want to become familiar with the IRS publication 535 - http://www.irs.gov/pub/irs-pdf/p535.pdf
and the IRS publication 334 - http://www.irs.gov/pub/irs-pdf/p334.pdf - see chapter "Business Expenses"
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business.
Please also see for reference the IRS publication 463 - http://www.irs.gov/pub/irs-pdf/p463.pdf page 13 -rules for deducting gifts as business expenses.
If you give gifts in the course of your trade or business, you can deduct all or part of the cost.
You can deduct no more than $25 for business gifts you give directly or indirectly to each person during your tax year. A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift.
If you give a gift to a member of a customer's family, the gift is generally considered to be an indirect gift to the customer. This rule does not apply if you have a bona fide, independent business connection with that family member and the gift is not intended for the customer's eventual use.
If you and your spouse both give gifts, both of you are treated as one taxpayer. It does not matter whether you have separate businesses, are separately employed, or whether each of you has an independent connection with the recipient. If a partnership gives gifts, the partnership and the partners are treated as one taxpayer.
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