Is gift cards for employee bonuses a valid tax write-off?

Gift cards provided to employees as bonuses are deductible as a business expense under IRS rules, similar to cash bonuses. However, they are considered a form of compensation and must be included in the employee's taxable income. This means the employer must report the value of the gift card on the employee's Form W-2. The deduction is allowed under the ordinary and necessary business expenses provision, but it is crucial to ensure that the gift card is not classified as a de minimis fringe benefit, which typically applies to items of minimal value that are not cash or cash equivalents. For example, a $50 gift card given as a holiday bonus would be deductible for the employer and taxable for the employee.