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Although the mere presence of an incidental future
benefit--”some future aspect”--may not warrant
capitalization, a taxpayer’s realization of benefits
beyond the year in which the expenditure is incurred is
undeniably important in determining whether the
appropriate tax treatment is immediate deduction or
capitalization. * * *
Id. (emphasis added). We have characterized the inquiry as to
whether an expenditure may be deducted under section 162(a) or
must be capitalized as “an inquiry into the proper time to give
tax effect to the expenditure.” A.E. Staley Manufacturing Co. v.
Commissioner, 105 T.C. 166, 193, revd. and remanded 119 F.3d 482
(7th Cir. 1997). In A.E. Staley Manufacturing Co., we stated
that the inquiry is “fact specific”, and we described the general
nature of the inquiry as follows:
Assuming that the expenditure is ordinary and
necessary in the operation of the taxpayer’s business,
the answer to the question of whether the expenditure
is a deduction allowable as a business expense must be
determined from the nature of the expenditure itself
which in turn depends on the extent and permanence of
the work accomplished by the expenditure.
Id. at 193-194 (quoting 6 Mertens, Law of Federal Income
Taxation, sec. 25.37, at 118 (1992 rev.).
3. Ordinary Business Advertising
“Advertising” is commonly defined as: “The activity of
attracting public attention to a product or business, as by paid
announcements in print or on the air.” The American Heritage
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