Industry Must Mobilize to Thwart Ad-Tax Deduction Shift
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If you’re reading this you are likely in the business of advertising. That means you will be affected if Congress passes any tax provision or bill that changes the long-held deduction of advertising costs. This is a possible outcome of the battle over tax reform in Washington.
For decades, U.S. businesses have been allowed to deduct 100% of advertising costs as an ordinary and necessary expense. But two approaches under consideration will radically change this. One comes from the House Ways and Means committee under Chairman David Camp, R-Mich., and the other from the Senate Finance Committee under Chairman Max Baucus, D-Mont. These proposals call for businesses to deduct only 50% of costs in the year the advertising runs and then amortize the deduction of the remaining 50% over a period of five or 10 years.
It’s worth noting that both Mr. Baucus and Mr. Camp, despite being from different parties and chambers, toured the country together over the summer in advocating for tax reform. This coordination is expected to continue and will give the pending legislation even more heft.
