Page:United States Statutes at Large Volume 76.djvu/1022

 974

PUBLIC LAW 87-834-OCT. 16, 1962

[76

STAT.

SEC. 4. DISALLOWANCE OF CERTAIN ENTERTAINMENT, ETC., EXPENSES. (a)

26 USC 261-273.

DP2NIAL OF DEDUCTION.—

(1) Part IX of subchapter B of chapter 1 (relating to items not deductible in computing taxable income) is amended by adding at the end thereof the following new section: "SEC. 274. DISALLOWANCE OF CERTAIN ENTERTAINMENT, ETC., EXPENSES. "(a)

ENTERTAINMENT, AMUSEMENT, OR RECREATION,— " (1) IN GENERAL.—NO deduction otherwise allowable

under

this chapter shall be allowed for any item— " (A) ACTIVITY.—With respect to an activity which is of a type generally considered to constitute entertainment, amusement, or recreation, unless the taxpayer establishes that the item was directly related to, or, in the case of an item directly preceding or following a substantial and bona fide business discussion (including Dusiness meetings at a convention or otherwise), that such item was associated with, the active conduct of the taxpayer's trade or business, or " (B) FACILITY.—With respect to a facility used in connection with an activity referred to in subparagraph (A), unless the taxpayer establishes that the facility was used primarily for the furtherance of the taxpayer's trade or business and that the item was directly related to the active conduct of such trade or business, and such deduction shall in no event exceed the portion of such item directly related to, or, in the case of an item described in sub)aragraph (A) directly preceding or following a substantial anil >ona fide business discussion (including business meetings at a ' convention or otherwise), the portion of such item associated with, the active conduct of the taxpayer's trade or business. "(2) SPECIAL RULES.—For purposes of applying paragraph (1)" (A) Dues or fees to any social, athletic, or sporting club or organization shall be treated as items with respect to facilities. " (B) An activity described in section 212 shall be treated as a trade or business.

i

26 USC 212.

"(b)

26 p. 973. Ante, usc^i6^2;

GIFTS.—

" (1) LIMITATION.—No deduction shall be allowed under section "[(^2 or section 212 for any expense for gifts made directly or indirectly to any individual to" the extent that such expense, when added to prior expenses of the taxpayer for gifts made to such individual during the same taxable year, exceeds $25. For purposes of this section, the term 'gift' means any item excludable from gross income of the recipient under section 102 which is not excludable from his gross income under any other provision of this chapter, but such term does not include— " (A) an item having a cost to the taxpayer not in excass of $4.00 on which the name of the taxpayer is clearly and permanently imprinted and which is one of a number of identical items distributed generally by the taxpayer, " (B) a sign, display rack, or other promotional material to be used on the business premises of the recipient, or " (C) an item of tangible personal property having a cost to the taxpayer not in excess of $100 which is awarded to an employee by reason of length of service or for safety a(hievement.

�