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recurring, day-to-day business expense, deductible under section
162(a) for that reason alone. In the alternative, petitioner
argues that the litigated expenses are deductible under section
174.
Respondent agrees that the litigated expenses are similar to
some expenditures for ordinary business advertising, but he
argues that not all expenditures for ordinary business
advertising are deductible under section 162(a). Respondent
distinguishes between the costs of developing advertising
campaigns (advertising campaign expenditures) and the costs of
executing those campaigns by way of, for instance, the production
of television commercials (advertising execution expenditures).
Respondent argues that advertising execution expenditures
generally give rise to expenses deductible under section 162
(deductible business expenses) but that advertising campaign
expenditures do not. Respondent sees a “decisive difference”
between advertising campaign expenditures and advertising
execution expenditures in that the former give rise only to long-
term benefits while the latter give rise principally to short-
term benefits. Respondent analogizes the litigated expenses to
advertising campaign expenses and argues that the litigated
expenses provide an intangible benefit to Reynolds over the
economic lives of the brands to which they attach. Consequently,
respondent concludes that the litigated expenses must be
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