Q. We have a reciprocal agreement with another company in a related field. If they furnish “qualified leads” to us and we reward them, are the payments treated as ? D.L.H., Charlotte, N.C.
A. No. Rewards of cash or property for furnishing the names of potential customers or clients are treated as compensation. The U.S. Supreme Court has ruled that such a transfer constitutes payment for services rendered. (Duberstein, 363 US 278)
Tip: Generally, your business can deduct compensation amounts in full. In contrast, the deduction for business gifts is limited to only $25 per recipient per year.
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