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Where business leads go, taxes follow

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in Business Etiquette,Workplace Communication

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 business gifts? 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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