Yes, gifts can be considered a business expense.  However, limitations apply.

Employee - generally, all gifts to an employee are considered compensation and must be included in the W-2. Any cash, gift certificates, or similar item that is easily convertible to cash should be included in the W-2. However, Holiday gifts (i.e. turkey or ham) or other nominal items (i.e. theater or sporting event tickets) are "de minimis" fringe benefits and not included in the employee's gross wages.

Non-employees - deductions for business gifts made directly or indirectly to any non-employee individual are limited to $25 per year.  Any value above this is non-deductible.  For these purposes gifts to family members/spouses of a customer are deemed to have been given to the customer.  A married couple is considered one taxpayer when looking at gift limitations.

Please let us know if you have further questions about the gift limitations.