Business gift or entertainment cost?

You decide. The tax law limits a deduction for business gifts to $25 per person per year. But in some cases, you can opt to treat a gift as an entertainment expense—the $25 limit doesn’t apply but you cannot deduct more than 50% of the cost. Example of expenses deductible in either category: Tickets to the theater or sporting event where you don’t accompany the customer, client, or prospect.