Realtor buyer rebates - tax deductible?

As a corporation, ordinary business expenses are treated as such and thus deductible against income.  The trick is to figure out how the "gift" becomes an ordinary business expense.  That requires a tax professionals advice. 

I know of the $50 limit also, but have been able to use these types of expenses under ordinary business expenses since the business provides the expenses, not the individual.  Also everyone receives the same amount regardless of the loan size.  This creates the ordinary part of the equation. 

I have been through an audit before and was successful, although nothing arose about this topic.

One thing to point out, the link to the exclusion is a reference to IRS Publication 463.  The people this refers to are:

employee or
a sole proprietor

who has business-related travel, entertainment, gift, or transportation expenses.

It does not pertain to corporations.  Just wanted to point that out.

Stephen, thanks for the response.  I reviewed it and I see the law for myself and those that have the corporation pay the gift can deduct it fully.  Here is why...

Even though as a corporation, we are to look at Publication 463, it does not apply and states that clearly as shown below (right out of the publication):

Who should use this publication.  You should use this publication if you are an employee or a sole proprietor who has business-related travel, entertainment, gift, or transportation expenses.

Who does not need to use this publication.  Partnerships, corporations, trusts, and employers who reimburse their employees for business expenses should refer to their tax form instructions and chapter 13 of Publication 535, Business Expenses, for information on deducting travel, meals, entertainment, and transportation expenses.

(note that gifts are not listed in the bottom paragraph as they are not addressed directly in Publication 535)

When referencing Publication 535, gifts are not listed or addressed in this publication, so we look at the general deductibility and this is what the publication says:

What can I deduct?

To be deductible, a business expense must be both ordinary and necessary.  An ordinary expense is one that is common and accepted by your industry.  A necessary expense is one that is helpful and appropriate for your trade or business.  An expense does not have to be indispensible to be considered necessary.

Based on these findings, I would say that corporations that provide gifts for closings/transactions is able to deduct the full amount as it is both ordinary and necessary in our industry per IRS definition.

I may be wrong, but this is straight from the publications (links) you listed.  Remember, I am talking about if the corporation pays for the expense, not the individual realtor or LO.  If the employee pays for it, it falls back under the $25 per person limitation found in pub. 463.

I hope this helps...

Stephen,

Please let me know what he says.  I may have to change the way I record stuff.