Whether you have a small business or a large business, one of the things that is considered as the basis of success is the happiness of the customer or your client. This especially true if you are in a sales oriented company (who is not!). The happiness of the client makes all the difference. So it's only fair that the entertainment of the clients by the company is considered to be serious business. Things like golf trips, trips to casinos, eating at expensive restaurants, and tickets to your favorite sporting events are frequent activities on the company bill.
The deductions are at 50% limit. That means if you spent $1000 for tickets to the opera for the client, and were discussing business with them while at the opera or even if you weren't discussing business with them but it somehow may have a effect on your business in the future, $500 of those $1000 are tax deductible. This also applies to any kind of meals that you take during this time.
If you are an employee use form 2106, or form 2106 EZ to report business entertainment expenses. If you are an employee of the company, you can deduct for expenses that you incurred while doing your job only if your boss doesn't reimburse you for these expenses. Such deductible expenses include any expenses you incurred while doing your job, including the use of your car.
Deductions can only be claimed on products that are sold to you at face value or you can only deduct the amount of the product that is face value. For example, you buy two baseball tickets for a buddy of yours that happens to be also a very important part of a corporation that you are making alliance with. They are $125 seats but because it's for Yankees vs. Red Sox, you got them for $500 each. You send an employee with them that also happens to be friends with the corporate guy. When it comes to filing taxes all you can claim as deductible is $125, even though it cost you $1000 for both tickets.