They are not always deductible, but in your case I believe they are. You explained further that you conducted a promotion where you advertised that a portion of every sale would go to charity for a certain period of time.  Then you gave several charities gifts in fulfullment of your ads.  Under these circumstances, I agree that the gifts qualify as an ordinary business expense.  In fact, the IRS Chief Counsel recently issued an Advice Ruling in which he said that in a situation such as yours, the gifts are indeed deductible under IRC §162 because “the business had a reasonable expectation that its promotion would enhance and increase its business.”  Therefore we need file for an Audit Reconsideration to address this issue with Appeals.