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Section 1.162-1(a), Income Tax Regs. The regulations do not
further describe the nature of those advertising and selling
expenses (hereafter, without distinction, advertising expenses)
that are deductible business expenses, although section 1.162-
20(a)(2), Income Tax Regs., provides that expenditures for
institutional or “goodwill” advertising that keeps the taxpayer’s
name before the public are generally deductible business expenses
“provided the expenditures are related to the patronage the
taxpayer might reasonably expect in the future.” The
regulations, thus, suggest that expenditures for ordinary
business advertising are not subject to the usual inquiry when it
comes to the question of the proper time to give tax effect to
such an expenditure.
Sections 1.162-1(a) and 20(a)(2), Income Tax Regs., however
predates INDOPCO, Inc. v. Commissioner, supra at 87, in which the
Supreme Court concluded that significant future benefits were
“undeniably important” in making the capitalization inquiry. See
also FMR Corp. & Subs. v. Commissioner, 110 T.C. ___ (1998) (slip
op. at 39). Subsequently, the Commissioner ruled that INDOPCO,
Inc. does not affect the treatment of advertising expenditures
under section 162(a). In pertinent part, Rev. Rul. 92-80, 1992-2
C.B. 57, provides:
The Indopco decision does not affect the treatment
of advertising costs under section 162(a) of the Code.
These costs are generally deductible under that section
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