Deducting Your Entertainment Costs How much is it legal to deduct?
On the entertainment side, tax law allows you to deduct 50percent of meals and entertainment expenses that arebusiness-related. To qualify, you must be able to show that theexpense directly preceded or followed a substantial, bona fidebusiness discussion or that it's directly related to the activeconduct of your trade or business. You must keep good records,which include a receipt for any expenditure of $75 or more. Holidayparties, picnics and other social events you put on for youremployees and their families are an exception to the 50 percentrule. Such events are 100-percent deductible.