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that, on the evidence before us, petitioner has proven that the
litigated expenses are advertising expenditures, and we so find.
2. Deductible Business Expenses
Section 162(a) allows as a deduction "all the ordinary and
necessary expenses paid or incurred during the taxable year in
carrying on any trade or business". Generally, no deduction is
allowed for any capital expenditure. Compare sec. 179 with sec.
263(a)(1).6 The Supreme Court has held that a taxpayer’s
expenditure that “serves to create or enhance * * * a separate
and distinct” asset must be capitalized. Commissioner v. Lincoln
Sav. & Loan Association, 403 U.S. 345, 354 (1971). Subsequently,
the Court held that, although the separate-or-distinct-asset
standard is a sufficient condition for capitalization, it is not
a necessary condition and that an expenditure that gives rise to
more than incidental future benefits, whether or not the
expenditure gives rise to a separate and distinct asset, may
require capitalization. INDOPCO, Inc. v. Commissioner, 503 U.S.
79, 87 (1992).
6 In certain circumstances, capital expenditures may be
recovered by deductions taken over the useful life of the
resulting property or over some other predetermined period.
See, e.g., secs. 167, 197 (as added by the Omnibus Budget
Reconciliation Act of 1993, Pub. L. 103-66, sec. 13261(a),
107 Stat. 313, 532, effective generally for property acquired
after Aug. 10, 1993). We are not here concerned with any such
recovery. See supra n.3.
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