Prizes, Contests, and Other Promotional Activities
by Barbara Weltman
J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line
- Cover
- Title Page
- Dedication
- Copyright
- Preface
- Introduction
- Part 1: Organization
- Chapter 1: Business Organization
- Sole Proprietorships
- Partnerships and Limited Liability Companies
- S Corporations and Their Shareholder-Employees
- C Corporations and Their Shareholder-Employees
- Employees
- Factors in Choosing Your Form of Business Organization
- Forms of Business Organization Compared
- Changing Your Form of Business
- Tax Identification Number
- Chapter 2: Tax Year and Accounting Methods
- Chapter 3: Recordkeeping for Business Income and Deductions
- Chapter 1: Business Organization
- Part 2: Business Income and Losses
- Part 3: Business Deductions and Credits
- Chapter 7: Employee Compensation
- Chapter 8: Travel and Entertainment Expenses
- Chapter 9: Car and Truck Expenses
- Deducting Car Expenses in General
- Actual Expense Method
- Standard Mileage Allowance
- Leasing a Car for Business
- Arranging Car Ownership
- Employee Use of an Employer-Provided Car
- Vehicle Trade-In
- Trucks and Vans
- Credit for Plug-In Electric Vehicles
- Reimbursement Arrangements
- Recordkeeping for Car Expenses
- Chapter 10: Repairs, Maintenance, and Energy Improvements
- Chapter 11: Bad Debts
- Chapter 12: Rents
- Chapter 13: Taxes and Interest
- Chapter 14: First-Year Expensing, Depreciation, Amortization, and Depletion
- First-Year Expensing
- Other Expensing Opportunities
- General Rules for Depreciation
- Modified Accelerated Cost Recovery System
- Mid-Quarter Convention
- Mid-Month Convention
- Bonus Depreciation
- Limitations on Listed Property
- Rebuilding Incentives for Certain Disaster Victims
- Putting Personal Property to Business Use
- Amortization
- Depletion
- Chapter 15: Advertising Expenses
- Chapter 16: Retirement Plans
- Qualified Retirement Plans
- Added Costs for Retirement Plans
- Retirement Plans for Self-Employed Individuals
- Regular 401(k)s, Roth 401(k)s, and Db(k)s
- Individual Retirement Accounts
- When to Take Action
- Comparison of Qualified Retirement Plans
- ESOPs
- Correcting Plan Defects
- Nonqualified Retirement Plans
- Glossary of Terms for Retirement Plans
- Chapter 17: Casualty and Theft Losses
- Chapter 18: Home Office Deductions
- Chapter 19: Medical Coverage
- Deducting Medical Insurance
- Deducting Health Coverage by Self-Employed Persons and More-Than-2% S Corporation Shareholders
- Using Medical Reimbursement Plans
- Tax Credit for Contributions to Employee Health Coverage
- Shifting the Cost of Coverage to Employees
- Setting Up Health Savings Accounts (HSAs)
- Archer Medical Savings Accounts (MSAs)
- Health Reimbursement Arrangements
- COBRA Coverage
- Wellness Programs
- Future Health Care Changes
- Chapter 20: Deductions for Farmers
- Chapter 21: Domestic Production Activities Deduction
- Chapter 22: Miscellaneous Business Deductions
- Other Business Expenses in General
- Job-Seeking Expenses
- Moving Expenses
- Educational Expenses
- Charitable Contributions Made by Your Business
- Licenses and Permits
- Dues and Subscriptions
- Legal and Professional Fees
- Bank and Merchant Fees
- Supplies, Materials, and Office Expenses
- Uniforms and Clothing
- Insurance
- Commissions
- Outsourced Workers
- Payments to Directors and Independent Contractors
- Penalties, Fines, and Damages
- Meal Costs for Day-Care Providers
- Expenses of Disabled Persons
- The Dividends-Received Deduction
- Other Expenses
- Chapter 23: Roundup of Tax Credits
- Part 4: Tax Planning For Your Small Business
- Chapter 24: Income and Deduction Strategies
- Chapter 25: Tax Strategies for Opening or Closing a Business
- Initial Tax Decisions to Make
- Investing Your Own Resources
- Debt versus Equity Financing
- Tax Identification Numbers
- Tax Reporting for the First Year
- How to Write Off Start-Up Costs
- Setting Up a Business Bank Account and Credit Card
- Moving a Business
- Aborted Business Ventures
- Bankruptcy
- Expenses of Winding Up a Small Business
- Tax Reporting in the Final Year
- Chapter 26: Tax Strategies for a Sideline Business
- Chapter 27: Tax Strategies for Multiple Businesses
- Chapter 28: Alternative Minimum Tax
- Chapter 29: Other Taxes
- Chapter 30: Filing Income Tax Returns and Paying Taxes
- Chapter 31: Succession Planning
- Appendix A: Information Returns
- Appendix B: Checklist of Tax-Related Corporate Resolutions
- Index
Prizes, Contests, and Other Promotional Activities
Amounts paid for prizes, contests, and other promotional activities may be deducted as advertising expenses if you can show that the expenses have a relationship to your business. The amounts expended must be reasonable; they must not be out of proportion to the amount of business expected to be obtained as a result of the prize, contest, or other promotional activity.
Example
A restaurant owner gives away a car to the holder of a lucky-number ticket. These tickets had been distributed to patrons. The cost of the car was a deductible business expense.
Sponsorships of teams and other events can be deducted as advertising expenses (e.g., sponsorship of a tennis match or golf tournament).
Prizes and other awards given to employees are not treated as advertising costs. They are part of compensation (see Chapter 7).
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