Generally, reasonable expenses incurred in the ordinary and necessary course of a legitimate trade or business are deductible from gross income under the U.S. Tax Code; however in an effort to curb tobacco use, recent legislation has disallowed this benefit to tobacco companies for advertising expenses. The judiciary has upheld this disallowance under the doctrine of legislative grace. This thesis critiques the doctrine of legislative grace along with a review Congress’s power to tax income and the role of deductions. Also, the possibility of disallowing business expenses under public policy grounds is examined, and the relationship between lobbying expenses and advertising expenses is analyzed. Finally, the author suggests alternative methods to reduce tobacco use such as a special tax on tobacco companies to finance a public awareness campaign, stricter penalties for selling tobacco to minors, and an outright ban on tobacco advertising.
Mannam, Ravi, "An Analysis of the Disallowance of Advertising Expenses for Tobacco Products" (1996). LLM Theses and Essays. 130.