You can deduct 50% of your business entertainment expenses. Deductible entertainment expenses must be both ordinary (common and accepted in your type of business) and necessary (one that is helpful and appropriate, although not necessarily indispensable, to your business).

Entertainment expenses are tax deductible as a "directly-related" entertainment expense, or as an "associated" entertainment expense:

1. Directly-Related: This includes entertainment that took place in a clear business setting, or that was in the active conduct of business. Furthermore, you must engage in business with the person during the entertainment period, and have more than a general expectation of getting business income or some other specific business benefit.
2. Associated: This includes entertainment that is associated with your business, and entertainment that either directly precedes or follows a substantial business discussion. This is generally interpreted to mean that the business discussion occurred within 24 hours prior to or after the event.

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