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Dictionary of the English Language 26 (3d ed. 1992).7 A business
may advertise principally to attract customers, and there is no
doubt that such advertising may contribute to the goodwill
enjoyed by the business. “Goodwill”, the Supreme Court stated,
“is the expectancy of continued patronage”. Newark Morning
Ledger Co. v. United States, 507 U.S. 546, 555-556 (1993) (“the
shorthand description of good-will as the expectancy of continued
patronage * * * provides a useful label with which to identify
the total of all the imponderable qualities that attract
customers to the business” (internal quotation marks and
citations omitted)). Thus, if an expenditure for ordinary
business advertising gives rise to goodwill, then, at least in
theory, the proper time to give tax effect to the expenditure may
be a period running beyond the taxable year of expenditure.
Nevertheless, the regulations interpreting section 162 include
“advertising and other selling expenses” among the class of
deductible business expenses:
Business expenses deductible from gross income include
the ordinary and necessary expenditures directly
connected with or pertaining to the taxpayer's trade or
business * * * Among the items included in business
expenses are * * * advertising and other selling
expenses * * *
7 We see no pertinent difference between this definition and
the “textbook” definition testified to by Dr. Bajaj. See supra
n.5.
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