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The result, as a practical matter, is that, notwithstanding
certain long-term benefits, expenditures for ordinary business
advertising are ordinary business expenses if the taxpayer can
show a sufficient connection between the expenditure and the
taxpayer’s business. See Burrous v. Commissioner, T.C. Memo.
1977-364 (taxpayer failed to prove a proximate relationship
between midget auto racing and any increase in his accounting
business). The only significant exceptions are that
(1) expenditures for foreign-based broadcast advertising to the
United States are disallowed if a like deduction is not allowed
by the foreign country for United States based broadcast
advertising to that country and (2) expenditures to advertise in
a political party’s convention program and certain other
political publications cannot be deducted. Secs. 162(j),
276(a)(1), respectively.8 Generally, expenditures for
billboards, signs, and other tangible assets associated with
advertising remain subject to the usual rules with respect to
capitalization. See, e.g., Best Lock Corp. v. Commissioner,
8 Sec. 162(j) was added by the Trade and Tariff Act of 1984,
Pub. L. 98-573, sec. 232(a), 98 Stat. 2991, and is effective for
taxable years beginning after Oct. 30, 1984. Under a provision
now repealed, taxpayers who elected to capitalize advertising
expenditures in computing their liability under the now defunct
wartime excise profits taxes had to follow a consistent practice
for subsequent expenditures. Sec. 263(b) (repealed by the
Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-508, sec.
11801(a)(16), 104 Stat. 1388-520); sec. 1.162-14, Income Tax
Regs.
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