§164 — Taxes
181 citing cases
Statute Text — 26 U.S.C. §164
Except as otherwise provided in this section, the following taxes shall be allowed as a deduction for the taxable year within which paid or accrued:
State and local, and foreign, real property taxes.
State and local personal property taxes.
State and local, and foreign, income, war profits, and excess profits taxes.
The GST tax imposed on income distributions.
In addition, there shall be allowed as a deduction State and local, and foreign, taxes not described in the preceding sentence which are paid or accrued within the taxable year in carrying on a trade or business or an activity described in section 212 (relating to expenses for production of income). Notwithstanding the preceding sentence, any tax (not described in the first sentence of this subsection) which is paid or accrued by the taxpayer in connection with an acquisition or disposition of property shall be treated as part of the cost of the acquired property or, in the case of a disposition, as a reduction in the amount realized on the disposition.
For purposes of this section—
The term “personal property tax” means an ad valorem tax which is imposed on an annual basis in respect of personal property.
A State or local tax includes only a tax imposed by a State, a possession of the United States, or a political subdivision of any of the foregoing, or by the District of Columbia.
A foreign tax includes only a tax imposed by the authority of a foreign country.
The GST tax imposed on income distributions is—
the tax imposed by section 2601, and
any State tax described in section 2604 (as in effect before its repeal),
but only to the extent such tax is imposed on a transfer which is included in the gross income of the distributee and to which section 666 does not apply.
Any tax referred to in subparagraph (A) imposed with respect to a transfer occurring during the taxable year of the distributee (or, in the case of a taxable termination, the trust) which is paid not later than the time prescribed by law (including extensions) for filing the return with respect to such transfer shall be treated as having been paid on the last day of the taxable year in which the transfer was made.
For purposes of subsection (a)—
At the election of the taxpayer for the taxable year, subsection (a) shall be applied—
without regard to the reference to State and local income taxes, and
as if State and local general sales taxes were referred to in a paragraph thereof.
The term “general sales tax” means a tax imposed at one rate with respect to the sale at retail of a broad range of classes of items.
In the case of items of food, clothing, medical supplies, and motor vehicles—
the fact that the tax does not apply with respect to some or all of such items shall not be taken into account in determining whether the tax applies with respect to a broad range of classes of items, and
the fact that the rate of tax applicable with respect to some or all of such items is lower than the general rate of tax shall not be taken into account in determining whether the tax is imposed at one rate.
Except in the case of a lower rate of tax applicable with respect to an item described in subparagraph (C), no deduction shall be allowed under this paragraph for any general sales tax imposed with respect to an item at a rate other than the general rate of tax.
A compensating use tax with respect to an item shall be treated as a general sales tax. For purposes of the preceding sentence, the term “compensating use tax” means, with respect to any item, a tax which—
is imposed on the use, storage, or consumption of such item, and
is complementary to a general sales tax, but only if a deduction is allowable under this paragraph with respect to items sold at retail in the taxing jurisdiction which are similar to such item.
In the case of motor vehicles, if the rate of tax exceeds the general rate, such excess shall be disregarded and the general rate shall be treated as the rate of tax.
If the amount of any general sales tax is separately stated, then, to the extent that the amount so stated is paid by the consumer (other than in connection with the consumer’s trade or business) to the seller, such amount shall be treated as a tax imposed on, and paid by, such consumer.
At the election of the taxpayer for the taxable year, the amount of the deduction allowed under this paragraph for such year shall be—
the amount determined under this paragraph (without regard to this subparagraph) with respect to motor vehicles, boats, and other items specified by the Secretary, and
the amount determined under tables prescribed by the Secretary with respect to items to which subclause (I) does not apply.
The tables prescribed under clause (i)—
shall reflect the provisions of this paragraph,
shall be based on the average consumption by taxpayers on a State-by-State basis (as determined by the Secretary) of items to which clause (i)(I) does not apply, taking into account filing status, number of dependents, adjusted gross income, and rates of State and local general sales taxation, and
need only be determined with respect to adjusted gross incomes up to the applicable amount (as determined under section 68(b)
1
1 See References in Text note below.
).
In the case of an individual and a taxable year beginning after
December 31, 2017
,
2
2 So in original. The comma probably should not appear.
—
foreign real property taxes shall not be taken into account under subsection (a)(1), and
the aggregate amount of taxes taken into account under paragraphs (1), (2), and (3) of subsection (a) and paragraph (5) of this subsection for any taxable year shall not exceed the applicable limitation amount (half the applicable limitation amount in the case of a married individual filing a separate return).
The preceding sentence shall not apply to any foreign taxes described in subsection (a)(3) or to any taxes described in paragraph (1) and (2) of subsection (a) which are paid or accrued in carrying on a trade or business or an activity described in section 212. For purposes of subparagraph (B), an amount paid in a taxable year beginning before
January 1, 2018
, with respect to a State or local income tax imposed for a taxable year beginning after
December 31, 2017
, shall be treated as paid on the last day of the taxable year for which such tax is so imposed.
For purposes of paragraph (6), the term “applicable limitation amount” means—
in the case of any taxable year beginning in calendar year 2025, $40,000,
in the case of any taxable year beginning in calendar year 2026, $40,400,
in the case of any taxable year beginning after calendar year 2026 and before 2030, 101 percent of the dollar amount in effect under this subparagraph for taxable years beginning in the preceding calendar year, and
in the case of any taxable year beginning after calendar year 2029, $10,000.
Except as provided in clause (iii), in the case of any taxable year beginning before January 1, 2030, the applicable limitation amount shall be reduced by 30 percent of the excess (if any) of the taxpayer’s modified adjusted gross income over the threshold amount (half the threshold amount in the case of a married individual filing a separate return).
For purposes of this subparagraph, the term “threshold amount” means—
in the case of any taxable year beginning in calendar year 2025, $500,000,
in the case of any taxable year beginning in calendar year 2026, $505,000, and
in the case of any taxable year beginning after calendar year 2026, 101 percent of the dollar amount in effect under this subparagraph for taxable years beginning in the preceding calendar year.
The reduction under clause (i) shall not result in the applicable limitation amount being less than $10,000.
For purposes of this paragraph, the term “modified adjusted gross income” means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
No deduction shall be allowed for the following taxes:
Taxes assessed against local benefits of a kind tending to increase the value of the property assessed; but this paragraph shall not prevent the deduction of so much of such taxes as is properly allocable to maintenance or interest charges.
Taxes on real property, to the extent that subsection (d) requires such taxes to be treated as imposed on another taxpayer.
For purposes of subsection (a), if real property is sold during any real property tax year, then—
so much of the real property tax as is properly allocable to that part of such year which ends on the day before the date of the sale shall be treated as a tax imposed on the seller, and
so much of such tax as is properly allocable to that part of such year which begins on the date of the sale shall be treated as a tax imposed on the purchaser.
In the case of any sale of real property, if—
a taxpayer may not, by reason of his method of accounting, deduct any amount for taxes unless paid, and
the other party to the sale is (under the law imposing the real property tax) liable for the real property tax for the real property tax year,
then for purposes of subsection (a) the taxpayer shall be treated as having paid, on the date of the sale, so much of such tax as, under paragraph (1) of this subsection, is treated as imposed on the taxpayer. For purposes of the preceding sentence, if neither party is liable for the tax, then the party holding the property at the time the tax becomes a lien on the property shall be considered liable for the real property tax for the real property tax year.
In the case of any sale of real property, if the taxpayer’s taxable income for the taxable year during which the sale occurs is computed under an accrual method of accounting, and if no election under section 461(c) (relating to the accrual of real property taxes) applies, then, for purposes of subsection (a), that portion of such tax which—
is treated, under paragraph (1) of this subsection, as imposed on the taxpayer, and
may not, by reason of the taxpayer’s method of accounting, be deducted by the taxpayer for any taxable year,
shall be treated as having accrued on the date of the sale.
Where a corporation pays a tax imposed on a shareholder on his interest as a shareholder, and where the shareholder does not reimburse the corporation, then—
the deduction allowed by subsection (a) shall be allowed to the corporation; and
no deduction shall be allowed the shareholder for such tax.
In the case of an individual, in addition to the taxes described in subsection (a), there shall be allowed as a deduction for the taxable year an amount equal to one-half of the taxes imposed by section 1401 (other than the taxes imposed by section 1401(b)(2)) for such taxable year.
For purposes of this chapter, the deduction allowed by paragraph (1) shall be treated as attributable to a trade or business carried on by the taxpayer which does not consist of the performance of services by the taxpayer as an employee.
For provisions disallowing any deduction for certain taxes, see section 275.
For treatment of taxes imposed by Indian tribal governments (or their subdivisions), see section 7871.
Treasury Regulations
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Treas. Reg. §1.164-1Deduction for taxes
(a) In general. Only the following taxes shall be allowed as a deduction under this section for the taxable year within which paid or accrued, according to the method of accounting used in computing taxable income:
(1) State and local, and foreign, real property taxes.
(2) State and local personal property taxes.
(3) State and local, and foreign, income, war profits, and excess profits taxes.
(4) State and local general sales taxes.
(5) State and local taxes on the sale of gasoline, diesel fuel, and other motor fuels.
In addition, there shall be allowed as a deduction under this section State and local and foreign taxes not described in subparagraphs (1) through (5) of this paragraph which are paid or accrued within the taxable year in carrying on a trade or business or an activity described in section 212 (relating to expenses for production of income). For example, dealers or investors in securities and dealers or investors in real estate may deduct State stock transfer and real estate transfer taxes, respectively, under section 164, to the extent they are expenses incurred in carrying on a trade or business or an activity for the production of income. In general, taxes are deductible only by the person upon whom they are imposed. However, see § 1.164-5 in the case of certain taxes paid by the consumer. Also, in the case of a qualified State individual income tax (as defined in section 6362 and the regulations thereunder) which is determined by reference to a percentage of the Federal income tax (pursuant to section 6362 (c)), an accrual method taxpayer shall use the cash receipts and disbursements method to compute the amount of his deduction therefor. Thus, the deduction under section 164 is in the amount actually paid with respect to the qualified tax, rather than the amount accrued with respect thereto, during the taxable year even though the taxpayer uses the accrual method of accounting for other purposes. In addition, see paragraph (f)(1) of § 301.6361-1 of this chapter (Regulations on Procedure and Administration) with respect to rules relating to allocation and reallocation of amounts collected on account of the Federal income tax and qualified taxes.
(b) Taxable years beginning before January 1, 1964. For taxable years beginning before January 1, 1964, except as otherwise provided in §§ 1.164-2 through 1.164-8, inclusive, taxes imposed by the United States, any State, territory, possession of the United States, or a political subdivision of any of the foregoing, or by any foreign country, are deductible from gross income for the taxable year in which paid or accrued, according to the method of accounting used in computing taxable income. For this purpose, postage is not a tax and automobile license or registration fees are ordinarily taxes.
(c) Cross references. For the definition of the term “real property taxes”, see paragraph (d) of § 1.164-3. For the definition of the term “foreign taxes”, see paragraph (d) of § 1.164-3. For the definition of the term “general sales taxes”, see paragraph (f) of § 1.164-3. For the treatment of gasoline, diesel fuel, and other motor fuel taxes, see § 1.164-5. For apportionment of taxes on real property between seller and purchaser, see section 164(d) and § 1.164-6. For the general rule for taxable year of deduction, see section 461. For provisions disallowing any deduction for the tax paid at the source on interest from tax-free covenant bonds, see section 1451(f).
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Treas. Reg. §1.164-1(a)In general.
In general. Only the following taxes shall be allowed as a deduction under this section for the taxable year within which paid or accrued, according to the method of accounting used in computing taxable income:
(1) State and local, and foreign, real property taxes.
(2) State and local personal property taxes.
(3) State and local, and foreign, income, war profits, and excess profits taxes.
(4) State and local general sales taxes.
(5) State and local taxes on the sale of gasoline, diesel fuel, and other motor fuels.
In addition, there shall be allowed as a deduction under this section State and local and foreign taxes not described in subparagraphs (1) through (5) of this paragraph which are paid or accrued within the taxable year in carrying on a trade or business or an activity described in section 212 (relating to expenses for production of income). For example, dealers or investors in securities and dealers or investors in real estate may deduct State stock transfer and real estate transfer taxes, respectively, under section 164, to the extent they are expenses incurred in carrying on a trade or business or an activity for the production of income. In general, taxes are deductible only by the person upon whom they are imposed. However, see § 1.164-5 in the case of certain taxes paid by the consumer. Also, in the case of a qualified State individual income tax (as defined in section 6362 and the regulations thereunder) which is determined by reference to a percentage of the Federal income tax (pursuant to section 6362 (c)), an accrual method taxpayer shall use the cash receipts and disbursements method to compute the amount of his deduction therefor. Thus, the deduction under section 164 is in the amount actually paid with respect to the qualified tax, rather than the amount accrued with respect thereto, during the taxable year even though the taxpayer uses the accrual method of accounting for other purposes. In addition, see paragraph (f)(1) of § 301.6361-1 of this chapter (Regulations on Procedure and Administration) with respect to rules relating to allocation and reallocation of amounts collected on account of the Federal income tax and qualified taxes.
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Treas. Reg. §1.164-1(b)Taxable years beginning before January 1, 1964.
Taxable years beginning before January 1, 1964. For taxable years beginning before January 1, 1964, except as otherwise provided in §§ 1.164-2 through 1.164-8, inclusive, taxes imposed by the United States, any State, territory, possession of the United States, or a political subdivision of any of the foregoing, or by any foreign country, are deductible from gross income for the taxable year in which paid or accrued, according to the method of accounting used in computing taxable income. For this purpose, postage is not a tax and automobile license or registration fees are ordinarily taxes.
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Treas. Reg. §1.164-1(c)Cross references.
Cross references. For the definition of the term “real property taxes”, see paragraph (d) of § 1.164-3. For the definition of the term “foreign taxes”, see paragraph (d) of § 1.164-3. For the definition of the term “general sales taxes”, see paragraph (f) of § 1.164-3. For the treatment of gasoline, diesel fuel, and other motor fuel taxes, see § 1.164-5. For apportionment of taxes on real property between seller and purchaser, see section 164(d) and § 1.164-6. For the general rule for taxable year of deduction, see section 461. For provisions disallowing any deduction for the tax paid at the source on interest from tax-free covenant bonds, see section 1451(f).
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Treas. Reg. §1.164-2Deduction denied in case of certain taxes
This section and § 1.275 describe certain taxes for which no deduction is allowed. In the case of taxable years beginning before January 1, 1964, the denial is provided for by section 164(b) (prior to being amended by section 207 of the Revenue Act of 1964 (78 Stat. 40)). In the case of taxable years beginning after December 31, 1963, the denial is governed by sections 164 and 275. No deduction is allowed for the following taxes:
(a) Federal income taxes. Federal income taxes, including the taxes imposed by section 3101, relating to the tax on employees under the Federal Insurance Contributions Act (chapter 21 of the Code); sections 3201 and 3211, relating to the taxes on railroad employees and railroad employee representatives; section 3402, relating to the tax withheld at source on wages; and by corresponding provisions of prior internal revenue laws.
(b) Federal war profits and excess profits taxes. Federal war profits and excess profits taxes including those imposed by title II of the Revenue Act of 1917 (39 Stat. 1000), title III of the Revenue Act of 1918 (40 Stat. 1088), title III of the Revenue Act of 1921 (42 Stat. 271), section 216 of the National Industrial Recovery Act (48 Stat. 208), section 702 of the Revenue Act of 1934 (48 Stat. 770), Subchapter D, Chapter 1 of the Internal Revenue Code of 1939, and Subchapter E, Chapter 2 of the Internal Revenue Code of 1939.
(c) Estate and gift taxes. Estate, inheritance, legacy, succession, and gift taxes.
(d) Foreign income taxes. Except as provided in § 1.901-1(c)(2) and (3), foreign income taxes, as defined in § 1.901-2(a), paid or accrued (as the case may be, depending on the taxpayer's method of accounting for such taxes) in a taxable year, if the taxpayer chooses to take to any extent the benefits of section 901, relating to the credit for taxes of foreign countries and possessions of the United States, for taxes that are paid or accrued (according to the taxpayer's method of accounting for such taxes) in such taxable year.
(e) Real property taxes. Taxes on real property, to the extent that section 164(d) and § 1.164-6 require such taxes to be treated as imposed on another taxpayer.
(f) Federal duties and excise taxes. Federal import or tariff duties, business, license, privilege, excise, and stamp taxes (not described in paragraphs (a), (b), (c), or (h) of this section, or § 1.164-4) paid or accrued within the taxable year. The fact that any such tax is not deductible as a tax under section 164 does not prevent (1) its deduction under section 162 or section 212, provided it represents an ordinary and necessary expense paid or incurred during the taxable year by a corporation or an individual in the conduct of any trade or business or, in the case of an individual for the production or collection of income, for the management, conservation, or maintenance of property held for the production of income, or in connection with the determination, collection, or refund of any tax, or (2) its being taken into account during the taxable year by a corporation or an individual as a part of the cost of acquiring or producing property in the trade or business or, in the case of an individual, as a part of the cost of property held for the production of income with respect to which it relates.
(g) Taxes for local benefits. Except as provided in § 1.164-4, taxes assessed against local benefits of a kind tending to increase the value of the property assessed.
(h) Excise tax on real estate investment trusts. The excise tax imposed on certain real estate investment trusts by section 4981.
(i) Applicability dates. Paragraph (d) of this section applies to foreign taxes paid or accrued in taxable years beginning on or after December 28, 2021.
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Treas. Reg. §1.164-2(a)Federal income taxes.
Federal income taxes. Federal income taxes, including the taxes imposed by section 3101, relating to the tax on employees under the Federal Insurance Contributions Act (chapter 21 of the Code); sections 3201 and 3211, relating to the taxes on railroad employees and railroad employee representatives; section 3402, relating to the tax withheld at source on wages; and by corresponding provisions of prior internal revenue laws.
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Treas. Reg. §1.164-2(b)Federal war profits and excess profits taxes.
Federal war profits and excess profits taxes. Federal war profits and excess profits taxes including those imposed by title II of the Revenue Act of 1917 (39 Stat. 1000), title III of the Revenue Act of 1918 (40 Stat. 1088), title III of the Revenue Act of 1921 (42 Stat. 271), section 216 of the National Industrial Recovery Act (48 Stat. 208), section 702 of the Revenue Act of 1934 (48 Stat. 770), Subchapter D, Chapter 1 of the Internal Revenue Code of 1939, and Subchapter E, Chapter 2 of the Internal Revenue Code of 1939.
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Treas. Reg. §1.164-2(c)Estate and gift taxes.
Estate and gift taxes. Estate, inheritance, legacy, succession, and gift taxes.
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Treas. Reg. §1.164-2(d)Foreign income taxes.
Foreign income taxes. Except as provided in § 1.901-1(c)(2) and (3), foreign income taxes, as defined in § 1.901-2(a), paid or accrued (as the case may be, depending on the taxpayer's method of accounting for such taxes) in a taxable year, if the taxpayer chooses to take to any extent the benefits of section 901, relating to the credit for taxes of foreign countries and possessions of the United States, for taxes that are paid or accrued (according to the taxpayer's method of accounting for such taxes) in such taxable year.
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Treas. Reg. §1.164-2(e)Real property taxes.
Real property taxes. Taxes on real property, to the extent that section 164(d) and § 1.164-6 require such taxes to be treated as imposed on another taxpayer.
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Treas. Reg. §1.164-2(f)Federal duties and excise taxes.
Federal duties and excise taxes. Federal import or tariff duties, business, license, privilege, excise, and stamp taxes (not described in paragraphs (a), (b), (c), or (h) of this section, or § 1.164-4) paid or accrued within the taxable year. The fact that any such tax is not deductible as a tax under section 164 does not prevent (1) its deduction under section 162 or section 212, provided it represents an ordinary and necessary expense paid or incurred during the taxable year by a corporation or an individual in the conduct of any trade or business or, in the case of an individual for the production or collection of income, for the management, conservation, or maintenance of property held for the production of income, or in connection with the determination, collection, or refund of any tax, or (2) its being taken into account during the taxable year by a corporation or an individual as a part of the cost of acquiring or producing property in the trade or business or, in the case of an individual, as a part of the cost of property held for the production of income with respect to which it relates.
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Treas. Reg. §1.164-2(g)Taxes for local benefits.
Taxes for local benefits. Except as provided in § 1.164-4, taxes assessed against local benefits of a kind tending to increase the value of the property assessed.
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Treas. Reg. §1.164-2(h)Excise tax on real estate investment trusts.
Excise tax on real estate investment trusts. The excise tax imposed on certain real estate investment trusts by section 4981.
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Treas. Reg. §1.164-2(i)Applicability dates.
Applicability dates. Paragraph (d) of this section applies to foreign taxes paid or accrued in taxable years beginning on or after December 28, 2021.
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Treas. Reg. §1.164-3Definitions and special rules
For purposes of section 164 and § 1.164-1 to § 1.164-8, inclusive—
(a) State or local taxes. A State or local tax includes only a tax imposed by a State, a possession of the United States, or a political subdivision of any of the foregoing, or by the District of Columbia.
(b) Real property taxes. The term “real property taxes” means taxes imposed on interests in real property and levied for the general public welfare, but it does not include taxes assessed against local benefits. See § 1.164-4.
(c) Personal property taxes. The term “personal property tax” means an ad valorem tax which is imposed on an annual basis in respect of personal property. To qualify as a personal property tax, a tax must meet the following three tests:
(1) The tax must be ad valorem—that is, substantially in proportion to the value of the personal property. A tax which is based on criteria other than value does not qualify as ad valorem. For example, a motor vehicle tax based on weight, model year, and horsepower, or any of these characteristics is not an ad valorem tax. However, a tax which is partly based on value and partly based on other criteria may qualify in part. For example, in the case of a motor vehicle tax of 1 percent of value plus 40 cents per hundredweight, the part of the tax equal to 1 percent of value qualifies as an ad valorem tax and the balance does not qualify.
(2) The tax must be imposed on an annual basis, even if collected more frequently or less frequently.
(3) The tax must be imposed in respect of personal property. A tax may be considered to be imposed in respect of personal property even if in form it is imposed on the exercise of a privilege. Thus, for taxable years beginning after December 31, 1963, State and local taxes on the registration or licensing of highway motor vehicles are not deductible as personal property taxes unless and to the extent that the tests prescribed in this subparagraph are met. For example, an annual ad valorem tax qualifies as a personal property tax although it is denominated a registration fee imposed for the privilege of registering motor vehicles or of using them on the highways.
(d) Foreign taxes. The term “foreign tax” includes only a tax imposed by the authority of a foreign country. A tax-imposed by a political subdivision of a foreign country is considered to be imposed by the authority of that foreign country.
(e) Sales tax. (1) The term “sales tax” means a tax imposed upon persons engaged in selling tangible personal property, or upon the consumers of such property, including persons selling gasoline or other motor vehicle fuels at wholesale or retail, which is a stated sum per unit of property sold or which is measured by the gross sales price or the gross receipts from the sale. The term also includes a tax imposed upon persons engaged in furnishing services which is measured by the gross receipts for furnishing such services.
(2) In general, the term “consumer” means the ultimate user or purchaser; it does not include a purchaser such as a retailer, who acquires the property for resale.
(f) General sales tax. A “general sales tax” is a sales tax which is imposed at one rate in respect of the sale at retail of a broad range of classes of items. No foreign sales tax is deductible under section 164(a) and paragraph (a)(4) of § 1.164-1. To qualify as a general sales tax, a tax must meet the following two tests:
(1) The tax must be a tax in respect of sales at retail. This may include a tax imposed on persons engaged in selling property at retail or furnishing services at retail, for example, if the tax is measured by gross sales price or by gross receipts from sales or services. Rentals qualify as sales at retail if so treated under applicable State sales tax laws.
(2) The tax must be general—that is, it must be imposed at one rate in respect of the retail sales of a broad range of classes of items. A sales tax is considered to be general although imposed on sales of various classes of items at more than one rate provided that one rate applies to the retail sales of a broad range of classes of items. The term “items” includes both commodities and services.
(g) Special rules relating to general sales taxes. (1) A sales tax which is general is usually imposed at one rate in respect of the retail sales of all tangible personal property (with exceptions and additions). However, a sales tax which is selective—that is, a tax which applies at one rate with respect to retail sales of specified classes of items also qualifies as general if the specified classes represent a broad range of classes of items. A selective sales tax which does not apply at one rate to the retail sales of a broad range of classes of items is not general. For example, a tax which applies only to sales of alcoholic beverages, tobacco, admissions, luxury items, and a few other items is not general. Similarly, a tax imposed solely on services is not general. However, a selective sales tax may be deemed to be part of the general sales tax and hence may be deductible, even if imposed by a separate title, etc., of the State or local law, if imposed at the same rate as the general rate of tax (as defined in subparagraph (4) of this paragraph) which qualifies a tax in the taxing jurisdiction as a general sales tax. For example, if a State has a 5 percent general sales tax and a separate selective sales tax of 5 percent on transient accommodations, the tax on transient accommodations is deductible.
(2) A tax is imposed at one rate only if it is imposed at that rate on generally the same base for all items subject to tax. For example, a sales tax imposed at a 3 percent rate on 100 percent of the sales price of some classes of items and at a 3 percent rate on 50 percent of the sales price of other classes of items would not be imposed at one rate with respect to all such classes. However, a tax is considered to be imposed at one rate although it allows dollar exemptions, if the exemptions are designed to exclude all sales under a certain dollar amount. For example, a tax may be imposed at one rate although it applies to all sales of tangible personal property but applies only to sales amounting to more than 10 cents.
(3) The fact that a sales tax exempts food, clothing, medical supplies, and motor vehicles, or any of them, shall not be taken into account in determining whether the tax applies to a broad range of classes of items. The fact that a sales tax applies to food, clothing, medical supplies, and motor vehicles, or any of them, at a rate which is lower than the general rate of tax (as defined in subparagraph (4) of this paragraph) is not taken into account in determining whether the tax is imposed at one rate on the retail sales of a broad range of classes of items. For purposes of this section, the term “food” means food for human consumption off the premises where sold, and the term “medical supplies” includes drugs, medicines, and medical devices.
(4) Except in the case of a lower rate of tax applicable in respect of food, clothing, medical supplies, and motor vehicles, or any of them, no deduction is allowed for a general sales tax in respect of any item if the tax is imposed on such item at a rate other than the general rate of tax. The general rate of tax is the one rate which qualifies a tax in a taxing jurisdiction as a general sales tax because the tax is imposed at such one rate on a broad range of classes of items. There can be only one general rate of tax in any one taxing jurisdiction. However, a general sales tax imposed at a lower rate or rates on food, clothing, motor vehicles, and medical supplies, or any of them, may nonetheless be deductible with respect to such items. For example, a sales tax which is imposed at 1 percent with respect to food, imposed at 3 percent with respect to a broad range of classes of tangible personal property, and imposed at 4 percent with respect to transient accommodations would qualify as a general sales tax. Taxes paid at the 1 percent and the 3 percent rates are deductible, but tax paid at the 4 percent rate is not deductible. The fact that a sales tax provides for the adjustment of the general rate of tax to reflect the sales tax rate in another taxing jurisdiction shall not be taken into account in determining whether the tax is imposed at one rate on the retail sales of a broad range of classes of items. Moreover, a general sales tax imposed at a lower rate with respect to an item in order to reflect the tax rate in another jurisdiction is also deductible at such lower rate. For example, State E imposes a general sales tax whose general rate is 3 percent. The State E sales tax law provides that in areas bordering on States with general sales taxes, selective sales taxes, or special excise taxes, the rate applied in the adjoining State will be used if such rate is under 3 percent. State F imposes a 2 percent sales tax. The 2 percent sales tax paid by residents of State E in areas bordering on State F is deductible.
(h) Compensating use taxes. A compensating use tax in respect of any item is treated as a general sales tax. The term “compensating use tax” means, in respect of any item, a tax which is imposed on the use, storage, or consumption of such item and which is complementary to a general sales tax which is deductible with respect to sales of similar items.
(i) Special rules relating to compensating use taxes. (1) In general, a use tax on an item is complementary to a general sales tax on similar items if the use tax is imposed on an item which was not subject to such general sales tax but which would have been subject to such general sales tax if the sale of the item had taken place within the jurisdiction imposing the use tax. For example, a tax imposed by State A on the use of a motor vehicle purchased in State B is complementary to the general sales tax of State A on similar items, if the latter tax applies to motor vehicles sold in State A.
(2) Since a compensating use tax is treated as a general sales tax, it is subject to the rule of subparagraph (C) of section 164(b)(2) and paragraph (g)(4) of this section that no deduction is allowed for a general sales tax imposed in respect of an item at a rate other than the general rate of tax (except in the case of lower rates on the sale of food, clothing, medical supplies, and motor vehicles). The fact that a compensating use tax in respect of any item provides for an adjustment in the rate of the compensating use tax or the amount of such tax to be paid on account of a sales tax on such item imposed by another taxing jurisdiction is not taken into account in determining whether the compensating use tax is imposed in respect of the item at a rate other than the general rate of tax. For example, a compensating use tax imposed by State C on the use of an item purchased in State D is considered to be imposed at the general rate of tax even though the tax imposed by State C allows a credit for any sales tax paid on such item in State D, or the rate of such compensating use tax is adjusted to reflect the rate of sales tax imposed by State D.
(j) Safe harbor for payments made by individuals in exchange for State or local tax credits—(1) In general. An individual who itemizes deductions and who makes a payment to or for the use of an entity described in section 170(c) in consideration for a State or local tax credit may treat as a payment of State or local tax for purposes of section 164 the portion of such payment for which a charitable contribution deduction under section 170 is disallowed under § 1.170A-1(h)(3). This treatment as payment of a State or local tax is allowed in the taxable year in which the payment is made to the extent that the resulting credit is applied, consistent with applicable State or local law, to offset the individual's State or local tax liability for such taxable year or the preceding taxable year.
(2) Credits carried forward. To the extent that a State or local tax credit described in paragraph (j)(1) of this section is not applied to offset the individual's applicable State or local tax liability for the taxable year of the payment or the preceding taxable year, any excess State or local tax credit permitted to be carried forward may be treated as a payment of State or local tax under section 164(a) in the taxable year or years for which the carryover credit is applied in accordance with State or local law.
(3) Limitation on individual deductions. Nothing in this paragraph (j) may be construed as permitting a taxpayer who applies this safe harbor to avoid the limitation of section 164(b)(6) for any amount paid as a tax or treated under this paragraph (j) as a payment of tax.
(4) No safe harbor for transfers of property. The safe harbor provided in this paragraph (j) applies only to a payment of cash or cash equivalent.
(5) Coordination with other deductions. An individual who deducts a payment under section 164 may not also deduct the same payment under any other Code section.
(6) Examples. In the following examples, the taxpayer is an individual who itemizes deductions for Federal income tax purposes.
(i) Example 1. In year 1, Taxpayer A makes a payment of $500 to an entity described in section 170(c). In return for the payment, A receives a dollar-for-dollar State income tax credit. Prior to application of the credit, A's State income tax liability for year 1 was more than $500. A applies the $500 credit to A's year 1 State income tax liability. Under paragraph (j)(1) of this section, A treats the $500 payment as a payment of State income tax in year 1. To determine A's deduction amount, A must apply the provisions of section 164 applicable to payments of State and local taxes, including the limitation in section 164(b)(6). See paragraph (j)(3) of this section.
(ii) Example 2. In year 1, Taxpayer B makes a payment of $7,000 to an entity described in section 170(c). In return for the payment, B receives a dollar-for-dollar State income tax credit, which under State law may be carried forward for three taxable years. Prior to application of the credit, B's State income tax liability for year 1 was $5,000; B applies $5,000 of the $7,000 credit to B's year 1 State income tax liability. Under paragraph (j)(1) of this section, B treats $5,000 of the $7,000 payment as a payment of State income tax in year 1. Prior to application of the remaining credit, B's State income tax liability for year 2 exceeds $2,000. B applies the excess credit of $2,000 to B's year 2 State income tax liability. For year 2, under paragraph (j)(2) of this section, B treats the $2,000 as a payment of State income tax under section 164. To determine B's deduction amounts in years 1 and 2, B must apply the provisions of section 164 applicable to payments of State and local taxes, including the limitation under section 164(b)(6). See paragraph (j)(3) of this section.
(iii) Example 3. In year 1, Taxpayer C makes a payment of $7,000 to an entity described in section 170(c). In return for the payment, C receives a local real property tax credit equal to 25 percent of the amount of this payment ($1,750). Prior to application of the credit, C's local real property tax liability in year 1 was more than $1,750. C applies the $1,750 credit to C's year 1 local real property tax liability. Under paragraph (j)(1) of this section, for year 1, C treats $1,750 of the $7,000 payment as a payment of local real property tax for purposes of section 164. To determine C's deduction amount, C must apply the provisions of section 164 applicable to payments of State and local taxes, including the limitation under section 164(b)(6). See paragraph (j)(3) of this section.
(7) Applicability date. This paragraph (j) applies to payments made to section 170(c) entities on or after June 11, 2019. However, a taxpayer may choose to apply this paragraph (j) to payments made to section 170(c) entities after August 27, 2018.
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Treas. Reg. §1.164-3(a)State or local taxes.
State or local taxes. A State or local tax includes only a tax imposed by a State, a possession of the United States, or a political subdivision of any of the foregoing, or by the District of Columbia.
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Treas. Reg. §1.164-3(b)Real property taxes.
Real property taxes. The term “real property taxes” means taxes imposed on interests in real property and levied for the general public welfare, but it does not include taxes assessed against local benefits. See § 1.164-4.
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Treas. Reg. §1.164-3(c)Personal property taxes.
Personal property taxes. The term “personal property tax” means an ad valorem tax which is imposed on an annual basis in respect of personal property. To qualify as a personal property tax, a tax must meet the following three tests:
(1) The tax must be ad valorem—that is, substantially in proportion to the value of the personal property. A tax which is based on criteria other than value does not qualify as ad valorem. For example, a motor vehicle tax based on weight, model year, and horsepower, or any of these characteristics is not an ad valorem tax. However, a tax which is partly based on value and partly based on other criteria may qualify in part. For example, in the case of a motor vehicle tax of 1 percent of value plus 40 cents per hundredweight, the part of the tax equal to 1 percent of value qualifies as an ad valorem tax and the balance does not qualify.
(2) The tax must be imposed on an annual basis, even if collected more frequently or less frequently.
(3) The tax must be imposed in respect of personal property. A tax may be considered to be imposed in respect of personal property even if in form it is imposed on the exercise of a privilege. Thus, for taxable years beginning after December 31, 1963, State and local taxes on the registration or licensing of highway motor vehicles are not deductible as personal property taxes unless and to the extent that the tests prescribed in this subparagraph are met. For example, an annual ad valorem tax qualifies as a personal property tax although it is denominated a registration fee imposed for the privilege of registering motor vehicles or of using them on the highways.
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Treas. Reg. §1.164-3(d)Foreign taxes.
Foreign taxes. The term “foreign tax” includes only a tax imposed by the authority of a foreign country. A tax-imposed by a political subdivision of a foreign country is considered to be imposed by the authority of that foreign country.
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Treas. Reg. §1.164-3(e)Sales tax.
Sales tax. (1) The term “sales tax” means a tax imposed upon persons engaged in selling tangible personal property, or upon the consumers of such property, including persons selling gasoline or other motor vehicle fuels at wholesale or retail, which is a stated sum per unit of property sold or which is measured by the gross sales price or the gross receipts from the sale. The term also includes a tax imposed upon persons engaged in furnishing services which is measured by the gross receipts for furnishing such services.
(2) In general, the term “consumer” means the ultimate user or purchaser; it does not include a purchaser such as a retailer, who acquires the property for resale.
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Treas. Reg. §1.164-3(f)General sales tax.
General sales tax. A “general sales tax” is a sales tax which is imposed at one rate in respect of the sale at retail of a broad range of classes of items. No foreign sales tax is deductible under section 164(a) and paragraph (a)(4) of § 1.164-1. To qualify as a general sales tax, a tax must meet the following two tests:
(1) The tax must be a tax in respect of sales at retail. This may include a tax imposed on persons engaged in selling property at retail or furnishing services at retail, for example, if the tax is measured by gross sales price or by gross receipts from sales or services. Rentals qualify as sales at retail if so treated under applicable State sales tax laws.
(2) The tax must be general—that is, it must be imposed at one rate in respect of the retail sales of a broad range of classes of items. A sales tax is considered to be general although imposed on sales of various classes of items at more than one rate provided that one rate applies to the retail sales of a broad range of classes of items. The term “items” includes both commodities and services.
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Treas. Reg. §1.164-3(g)Special rules relating to general sales taxes.
Special rules relating to general sales taxes. (1) A sales tax which is general is usually imposed at one rate in respect of the retail sales of all tangible personal property (with exceptions and additions). However, a sales tax which is selective—that is, a tax which applies at one rate with respect to retail sales of specified classes of items also qualifies as general if the specified classes represent a broad range of classes of items. A selective sales tax which does not apply at one rate to the retail sales of a broad range of classes of items is not general. For example, a tax which applies only to sales of alcoholic beverages, tobacco, admissions, luxury items, and a few other items is not general. Similarly, a tax imposed solely on services is not general. However, a selective sales tax may be deemed to be part of the general sales tax and hence may be deductible, even if imposed by a separate title, etc., of the State or local law, if imposed at the same rate as the general rate of tax (as defined in subparagraph (4) of this paragraph) which qualifies a tax in the taxing jurisdiction as a general sales tax. For example, if a State has a 5 percent general sales tax and a separate selective sales tax of 5 percent on transient accommodations, the tax on transient accommodations is deductible.
(2) A tax is imposed at one rate only if it is imposed at that rate on generally the same base for all items subject to tax. For example, a sales tax imposed at a 3 percent rate on 100 percent of the sales price of some classes of items and at a 3 percent rate on 50 percent of the sales price of other classes of items would not be imposed at one rate with respect to all such classes. However, a tax is considered to be imposed at one rate although it allows dollar exemptions, if the exemptions are designed to exclude all sales under a certain dollar amount. For example, a tax may be imposed at one rate although it applies to all sales of tangible personal property but applies only to sales amounting to more than 10 cents.
(3) The fact that a sales tax exempts food, clothing, medical supplies, and motor vehicles, or any of them, shall not be taken into account in determining whether the tax applies to a broad range of classes of items. The fact that a sales tax applies to food, clothing, medical supplies, and motor vehicles, or any of them, at a rate which is lower than the general rate of tax (as defined in subparagraph (4) of this paragraph) is not taken into account in determining whether the tax is imposed at one rate on the retail sales of a broad range of classes of items. For purposes of this section, the term “food” means food for human consumption off the premises where sold, and the term “medical supplies” includes drugs, medicines, and medical devices.
(4) Except in the case of a lower rate of tax applicable in respect of food, clothing, medical supplies, and motor vehicles, or any of them, no deduction is allowed for a general sales tax in respect of any item if the tax is imposed on such item at a rate other than the general rate of tax. The general rate of tax is the one rate which qualifies a tax in a taxing jurisdiction as a general sales tax because the tax is imposed at such one rate on a broad range of classes of items. There can be only one general rate of tax in any one taxing jurisdiction. However, a general sales tax imposed at a lower rate or rates on food, clothing, motor vehicles, and medical supplies, or any of them, may nonetheless be deductible with respect to such items. For example, a sales tax which is imposed at 1 percent with respect to food, imposed at 3 percent with respect to a broad range of classes of tangible personal property, and imposed at 4 percent with respect to transient accommodations would qualify as a general sales tax. Taxes paid at the 1 percent and the 3 percent rates are deductible, but tax paid at the 4 percent rate is not deductible. The fact that a sales tax provides for the adjustment of the general rate of tax to reflect the sales tax rate in another taxing jurisdiction shall not be taken into account in determining whether the tax is imposed at one rate on the retail sales of a broad range of classes of items. Moreover, a general sales tax imposed at a lower rate with respect to an item in order to reflect the tax rate in another jurisdiction is also deductible at such lower rate. For example, State E imposes a general sales tax whose general rate is 3 percent. The State E sales tax law provides that in areas bordering on States with general sales taxes, selective sales taxes, or special excise taxes, the rate applied in the adjoining State will be used if such rate is under 3 percent. State F imposes a 2 percent sales tax. The 2 percent sales tax paid by residents of State E in areas bordering on State F is deductible.
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Treas. Reg. §1.164-3(h)Compensating use taxes.
Compensating use taxes. A compensating use tax in respect of any item is treated as a general sales tax. The term “compensating use tax” means, in respect of any item, a tax which is imposed on the use, storage, or consumption of such item and which is complementary to a general sales tax which is deductible with respect to sales of similar items.
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Treas. Reg. §1.164-3(i)Example 1.
Example 1. In year 1, Taxpayer A makes a payment of $500 to an entity described in section 170(c). In return for the payment, A receives a dollar-for-dollar State income tax credit. Prior to application of the credit, A's State income tax liability for year 1 was more than $500. A applies the $500 credit to A's year 1 State income tax liability. Under paragraph (j)(1) of this section, A treats the $500 payment as a payment of State income tax in year 1. To determine A's deduction amount, A must apply the provisions of section 164 applicable to payments of State and local taxes, including the limitation in section 164(b)(6). See paragraph (j)(3) of this section.
(ii) Example 2. In year 1, Taxpayer B makes a payment of $7,000 to an entity described in section 170(c). In return for the payment, B receives a dollar-for-dollar State income tax credit, which under State law may be carried forward for three taxable years. Prior to application of the credit, B's State income tax liability for year 1 was $5,000; B applies $5,000 of the $7,000 credit to B's year 1 State income tax liability. Under paragraph (j)(1) of this section, B treats $5,000 of the $7,000 payment as a payment of State income tax in year 1. Prior to application of the remaining credit, B's State income tax liability for year 2 exceeds $2,000. B applies the excess credit of $2,000 to B's year 2 State income tax liability. For year 2, under paragraph (j)(2) of this section, B treats the $2,000 as a payment of State income tax under section 164. To determine B's deduction amounts in years 1 and 2, B must apply the provisions of section 164 applicable to payments of State and local taxes, including the limitation under section 164(b)(6). See paragraph (j)(3) of this section.
(iii) Example 3. In year 1, Taxpayer C makes a payment of $7,000 to an entity described in section 170(c). In return for the payment, C receives a local real property tax credit equal to 25 percent of the amount of this payment ($1,750). Prior to application of the credit, C's local real property tax liability in year 1 was more than $1,750. C applies the $1,750 credit to C's year 1 local real property tax liability. Under paragraph (j)(1) of this section, for year 1, C treats $1,750 of the $7,000 payment as a payment of local real property tax for purposes of section 164. To determine C's deduction amount, C must apply the provisions of section 164 applicable to payments of State and local taxes, including the limitation under section 164(b)(6). See paragraph (j)(3) of this section.
(7) Applicability date. This paragraph (j) applies to payments made to section 170(c) entities on or after June 11, 2019. However, a taxpayer may choose to apply this paragraph (j) to payments made to section 170(c) entities after August 27, 2018.
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Treas. Reg. §1.164-3(j)Safe harbor for payments made by individuals in exchange for State or local tax credits—(1) In general.
Safe harbor for payments made by individuals in exchange for State or local tax credits—(1) In general. An individual who itemizes deductions and who makes a payment to or for the use of an entity described in section 170(c) in consideration for a State or local tax credit may treat as a payment of State or local tax for purposes of section 164 the portion of such payment for which a charitable contribution deduction under section 170 is disallowed under § 1.170A-1(h)(3). This treatment as payment of a State or local tax is allowed in the taxable year in which the payment is made to the extent that the resulting credit is applied, consistent with applicable State or local law, to offset the individual's State or local tax liability for such taxable year or the preceding taxable year.
(2) Credits carried forward. To the extent that a State or local tax credit described in paragraph (j)(1) of this section is not applied to offset the individual's applicable State or local tax liability for the taxable year of the payment or the preceding taxable year, any excess State or local tax credit permitted to be carried forward may be treated as a payment of State or local tax under section 164(a) in the taxable year or years for which the carryover credit is applied in accordance with State or local law.
(3) Limitation on individual deductions. Nothing in this paragraph (j) may be construed as permitting a taxpayer who applies this safe harbor to avoid the limitation of section 164(b)(6) for any amount paid as a tax or treated under this paragraph (j) as a payment of tax.
(4) No safe harbor for transfers of property. The safe harbor provided in this paragraph (j) applies only to a payment of cash or cash equivalent.
(5) Coordination with other deductions. An individual who deducts a payment under section 164 may not also deduct the same payment under any other Code section.
(6) Examples. In the following examples, the taxpayer is an individual who itemizes deductions for Federal income tax purposes.
181 Citing Cases
Section 164 allows itemized deductions for state and local personal property taxes and for state and local real property taxes paid during the taxable year. For this purpose, the term “personal property tax” means an ad valorem tax imposed on an annual basis in respect of personal property, and the term “real property tax” means tax imposed on inte
State and Local General Sales Taxes Section 164 provides rules for deducting state and local real property taxes and personal property taxes.
ation (as defined in section 1371(b))” was struck from section 183(a) and “an S corporation” was inserted in its place. Subchapter S Revision Act of 1982, Pub. L. No. 97-354, § 5(a)(23), 96 Stat. 1669, 1694. 22 [*22] interest (sec. 163), and taxes (sec. 164). Viewed in the context of its position in part VI, section 183 is simply a statute that allows certain deductions attributable to “activities not engaged in for profit” in computing taxable income under section 63(a). Section 183(c) defines
The notice was 10 Though there may have been reductions in section 164 state and local tax deductions and other effects, this 78% return was otherwise tax free because it represented a reduction in tax rather than a taxable gain.
Section 164 allows a deduction for certain taxes, including state and local real property taxes, regardless of whether they were paid or incurred in a trade or business. Tschetter v. Commissioner, T.C. Memo. 2003-326, 86 T.C.M. (CCH) 639, 645. Generally, taxes are deductible 24 Exhibit 514-P attached a confirmation receipt for real property taxes o
entered into a payment plan for an outstanding Hackensack University Medical Center medical bill, which showed that petitioners had made a $195 payment toward the bill. 5 The Internal Revenue Code provides a deduction for taxes paid on real property, but not an exception to the 10% penalty on early withdrawal for taxes paid on real property. See §§ 164, 72(t).
Although federal excise taxes are generally not deductible under section 164 as taxes paid, those that are “paid or accrued by the taxpayer in connection with an acquisition or disposition of property shall be treated as part of the cost of the acquired property or, in the case of a disposition, as a reduction in the amount realized on the disposition,” and, therefore, fuel excise taxes may be included in a taxp
utory right complements, and does not supplant, the common-law right. See Miller v. Collectors Universe, Inc., 72 Cal. Rptr. 3d 194, 204-05 (Ct. App. 2008); 6A Romualdo P. Eclavea et al., California Jurisprudence 3d, Assault and Other Willful Torts, sec. 164 (West 2021). Both the common law-right and the statutory right are still around today. See Eclavea et al., supra, secs. 162-65. 34 The original code section was 990. See Cal. Civ. Code sec. 990; Comedy III Prods., Inc. v. Gary Saderup, Inc.,
Import of Our Decision in NCSBA Before turning to SJW’s arguments, we pause to consider the significance of our recent decision in NCSBA as it relates to these cases.7 There, NCSBA--also a medical marijuana dispensary--sought to save from disallowance the deductions it claimed for taxes (under section 164) and depreciation (under section 167).
Import of Our Decision in NCSBA Before turning to SJW’s arguments, we pause to consider the significance of our recent decision in NCSBA as it relates to these cases.7 There, NCSBA--also a medical marijuana dispensary--sought to save from disallowance the deductions it claimed for taxes (under section 164) and depreciation (under section 167).
State and Local Tax “Section 164 provides the rules under which taxpayers choosing to use itemized deductions may deduct certain taxes.” Figures v.
164 allows a deduction for those payments, those taxes paid are not startup expenditures. See sec. 195(c)(1)(B). If necessary, the parties can address that in their Rule 155 computation. - 18 - [*18] we sustain respondent's adjustments disallowing petitioners' Schedule C (farming) and F losses.6 II. Real Estate Activities Petitioners have fai
Import of Our Decision in NCSBA Before turning to SJW’s arguments, we pause to consider the significance of our recent decision in NCSBA as it relates to these cases.7 There, NCSBA--also a medical marijuana dispensary--sought to save from disallowance the deductions it claimed for taxes (under section 164) and depreciation (under section 167).
covered into" VIBIR by the IRS--were payments ofVirgin Islands tax eli- gible for credit under section 901. In their computations for entry ofdecision they contended that both categories ofpayments constituted State or local taxes deduct- ible under section 164. In their motion for leave they contended that payments in the first category were deductible under section 164 and that payments in the second category should be credited dollar-for-dollar against their Federal income tax liabilities und
covered into" VIBIR by the IRS--were payments ofVirgin Islands tax eli- gible for credit under section 901. In their computations for entry ofdecision they contended that both categories ofpayments constituted State or local taxes deduct- ible under section 164. In their motion for leave they contended that payments in the first category were deductible under section 164 and that payments in the second category should be credited dollar-for-dollar against their Federal income tax liabilities und
covered into" VIBIR by the IRS--were payments ofVirgin Islands tax eli- gible for credit under section 901. In their computations for entry ofdecision they contended that both categories ofpayments constituted State or local taxes deduct- ible under section 164. In their motion for leave they contended that payments in the first category were deductible under section 164 and that payments in the second category should be credited dollar-for-dollar against their Federal income tax liabilities und
164 provides that certain taxes shall be deductible for the tax year in which they are paid or accrued.
Real Property Taxes Section 164 allows taxpayers to deduct certain taxes paid within a taxable year.
timony that the satellite television had different receivers to show that the bills were separate and that this was not a personal expense. See sec. 262(a) (disallowing personal expenses). Additionally, 27Property taxes are generally deductible, see sec. 164, but petitioners provided no evidence as to whether, for example, Stitch It owned the property or they owned the property that incurred the liability or the nature ofthe property. 28Petitioners' activities that were not operated with a profi
timony that the satellite television had different receivers to show that the bills were separate and that this was not a personal expense. See sec. 262(a) (disallowing personal expenses). Additionally, 27Property taxes are generally deductible, see sec. 164, but petitioners provided no evidence as to whether, for example, Stitch It owned the property or they owned the property that incurred the liability or the nature ofthe property. 28Petitioners' activities that were not operated with a profi
for personal labor that was received as repayment of "On the basis ofpetitioner's business income of$2,320 in 2004, respondent determined that petitioner is liable for self-employmenttax of$328 for 2004, taking into account the deduction allowed by sec. 164. See sec. 1401. Petitioner did not challenge this determination in his petition. - 29 - [*29] a debt". As discussed supra, petitioner's argument is the type offrivolous argument that this Court and the U.S. Court ofAppeals for the Tenth Circ
Bridge, tax paid to California by Virgin Islands residents is deductible under section 164 but not creditable under section 901).
164(a) provides that State, local, and foreign taxes are deductible by the person on whomthe taxes are imposed. See sec. 1.164-l(a), Income Tax Regs. However, sec. 164(a) addresses only the deductibility oftaxes, not whether taxes should be included in gross receipts. Consequently, sec. 164(a) is inapplicable with respect to the issue ofwhetherpetitioner must include in gross receipts proceeds attributable to the cigarette tax stamps.
led to deduct it. The parties stipulated that petitionerpaid $11,784 in back property taxes (continued...) - 27 - [*27] these costs under section 263A. Petitioner argues that these costs are immediately deductible under section 162 or alternatively section 164. 1. Taxes Section 164(a)(1) allows a deduction for State and local real property taxes paid or accrued during the year. Sections 162 and 164 are subject, ifapplicable, to the section 263A capitalization rules. See sec. 161; see also Nat'l
Because we find that personal considerations primarily motivated the security system installation, we hold that respondent properly denied the related deduction.
, 1979-1 C.B. at 182, states that the cost of goods sold does not include proceeds attributable to the collection of State sales taxes. However, Rev. Rul. 79-196, supra, is inapplicable to this case because: (1) it addresses the de-ductibility under sec. 164 of State general sales taxes, not cigarette stamp taxes, see sec. 164(b)(5)(B); (2) it addresses installment sale reporting, not inventory reporting; and (3) it was issued before the enactment of sec. 263A. Sec. 471 provides the general rule
Taxes Respondent disallowedbetitioner's 2009 taxable year Schedule A deduction for taxes of$7,142.3 Section 164 provides the rules under which taxpayers choosing to use itemized deductions may deduct certain taxes.
0,672 $2,401.20 $2,668.00 $356.63 2003 10,871 2,445.98 2,717.75 280.51 2004 11,488 2,584.80 2,872.00 329.24 2005 12,957 (cid:16)042 2,915.33 2,461.83 519.75 2006 14,132 3,179.70 1,837.16 668.81 2007 24,122 5,427.45 1,668.54 1,097.84 Respondent conceded at trial that petitioner was entitled to section 163 deductions for mortgage interest as well as section 164 deductions for real estate taxes paid for the years at issue.
Whether Petitioner Is Entifled to a Deduction of$14,419 for Disputed Schedule E Real Property Tax Expenses for 2008 Section 164 allows a deduction for certain taxes, including State and local real property taxes, regardless ofwhether they were paid or incurred in a trade or business.
Moreover, they are entitled to an indome-tax deduction under section 164 (f) equal' to one-half of the additional self-employment tax.
- 24 - (1) the real estate taxes allowable as a deduction to the corporation under section 164 which are paid or incurred by the corporation on the houses or apartment building and on the land on which such houses (or building) are situated, or (2) the interest allowable as a deduction to the corporation under section 163 which is paid or incurred by the corporation on its indebtedness contracted-- (A) in the acquisition, constru
Petitioner also claims a section 164 deduction for property taxes paid on the property in 1991.
for the staxable year, plus ( i) the amoùnt of the taxp'ayer' s net earn- ings f om selfiemployment for the taxable year (withi the meaning of section 1402 (a) ) , but such net ea nings shall be determined with regard to the de uction allowed to the taxpayer by section 164 (f) Section 32 (c) (2) B) provides that for purposes, of section 32 (c) (2) (A) the t erm "earned income" does not include amounts received as a per sion or-an annuity.
Respondent appears to reason that if an individual taxpayer who sells credits itemizes deductions (ignoring phase-outs), that taxpayer's section 164 Federal income tax deduction is greater than it: would have been had that taxpayer retained and used the credits.
Accordingly, we hold that 'petitioners are liable.for self-employment tax of $836 on $5,592 of nonemployee compensation, see sec.
urn. A. Whether Petitioners Are Entitled to.the Deductions as a Result of the Withholdings Petitioners claim that the amounts withheld from Mr. May's paycheck for State income taxes entitle them to Federal income tax deductions for those taxes under section 164. We disagree. Like the withholdings for Federal taxes, the withholdings from Mr. May's paycheck for State income taxes were not remitted to the proper authorities. Those withholdings remained in Maranatha's bank account under the function
urn. A. Whether Petitioners Are Entitled to.the Deductions as a Result of the Withholdings Petitioners claim that the amounts withheld from Mr. May's paycheck for State income taxes entitle them to Federal income tax deductions for those taxes under section 164. We disagree. Like the withholdings for Federal taxes, the withholdings from Mr. May's paycheck for State income taxes were not remitted to the proper authorities. Those withholdings remained in Maranatha's bank account under the function
Respondent appears to reason that if an individual taxpayer who sells credits itemizes deductions (ignoring phase-outs), that taxpayer’s section 164 Federal income tax deduction is greater than it would have been had that taxpayer retained and used the credits.
or accrued to a cooperative housing corporation within the taxable year, but only to the extent that such amounts represent the tenant-stockholder’s proportionate share of— (1) the real estate taxes allowable as a deduction to the corporation under section 164 which are paid or incurred by the corporation on the houses or apartment building and on the land on which such houses (or building) are situated, or (2) the interest allowable as a deduction to the corporation under section 163 which is
Under section 164(f ) petitioners are entitled to a deduction for income tax purposes . of one-half of their self-employment, taxes .-._ , IV. Additional Tax for Early Distribution From Qualified Retirement Plan Section 72(t)(1) imposes a 10-percent additional tax o n early distributions from qualified retirement plans unless the 15 distribution meets o
Thus petitioner is entitled to a deduction under section 164 for that amount.
Since we hold petitioner had self-employment income, petitioner is also subject to self-employment taxes and is entitled to a deduction for one-half of the tax amount.
Respondent asserts, however, that the transaction privilege tax in issue does not qualify as a general sales tax under section 164 because contractor's sales are not sales at retail in the State of Arizona .5 We agree with respondent .
Under section 164(f ) petitioners are entitled to a deduction for income tax purposes . of one-half of their self-employment, taxes .-._ , IV. Additional Tax for Early Distribution From Qualified Retirement Plan Section 72(t)(1) imposes a 10-percent additional tax o n early distributions from qualified retirement plans unless the 15 distribution meets o
Section 164 in effect for taxable year 2001 did not permit th e 12 Petitioners' substantiated medical expenses for 2003 are less than the 7 .5-percent floor imposed by sec . 213(a) . Accordingly, they are not entitled to any medical expense deduction for 2003 . 20 - deduction of State and local general sales taxes on personal purchases ;" rather t
Section 164 allows a deduction for certain taxes, including State and local real property taxes, paid or accrued during the taxable year . Petitioner provided sufficient evidence that she paid $3,056 in real estate taxes for 2002, but provided no evidence with respect to the other years at issue . Accordingly, petitioner is entitled to the deductio
164, 901.4 Section 164(a)(3) provides that a deduction is allowed for foreign income taxes.
Because we hold that the Swansons earned the income, they are liable for the self-employment tax imposed by section 1401 and entitled to the 'related deduction under section 164 (f).
In lieu of the section 164 deduction, section 901(a) and (b)(1) permits a taxpayer to elect a credit for foreign income tax which meets the requirements set forth in the statute and the regulations promulgated thereunder.
Because he was not liable on the Greenpoint mortgage and because he was not the legal or equitable owner of the Bronx Boulevard house, we hold that petitioner was not entitled to a I deduction for mortgage interest on his 2003 income tax return .
Under section 164, real property taxes paid by a taxpayer may be deductible by the person upon whom the taxes are imposed. Sec. 1.164-1(a), Income Tax Regs.; see Magruder v. Supplee, 316 U.S. 394, 396 (1942). The equitable or beneficial owner of real property who pays taxes assessed against the property to protect his or her interest therein may deduct t
of the contract for deed as alimony. 10This general rule does not apply to those expenses that are deductible regardless of any connection with a trade or business, such as mortgage interest on the residence under sec. 163, real estate taxes under sec. 164, or casualty losses under sec. 165. Sec. 280A(b). - 11 - of the number of days the unit is rented at fair rental value, no deduction is allowed. Sec. 280A(a), (d)(1). Nor may taxpayers deduct expenses for the portion of a residence not “exclu
Respondent agrees that petitioners are entitled to deduct, under section 164, $1,017 of the claimed Schedule A deduction for real estate taxes.
Under section 164, a taxpayer may deduct State and local real property and income taxes paid or accrued during the taxable year. A real property tax is one that is imposed upon real property to benefit the general public welfare. Sec. 1.164-3(b), Income Tax Regs. A State or local tax is one that is imposed by a State, by a possession of the United States
fer of the contract for deed as alimony. This general rule does not apply to those expenses that are deductible regardless of any connection with a trade or business, such as mortgage interest on the residence under sec. 163, real estate taxes under sec. 164, or casualty losses under sec. 165. Sec. 280A(b). Petitioners vaguely assert that she stayed on a “single occasion.” Nor have petitioners carried their burden to prove that they rented the unit for at least 15 days in 1997. See sec. 280A(g);
The application of section 164 was modified during 1960 by the enactment of section 461(d), 7 Petitioner’s original reporting position for 1989 was to claim a $932,979 deduction for California franchise tax and no deduction for its short taxable year ended Dec.
Whether or not section 56(b)(1)(A)(ii) has that effect, we do not agree that that reading precludes respondent's claim here; i.e., that a deduction under section 216(a)(1) based on taxes paid by a cooperative housing corporation is a deduction for taxes "described in" section 164(a).
ductible) paid or accrued to a cooperative housing corporation within the taxable year, to the extent that such amounts represent the tenant-stockholder’s proportionate share of the real estate taxes allowable as a deduction to the corporation under section 164. Sec. 216(a)(1); sec. 1.216- 1(a)(1), Income Tax Regs. Section 164 allows a deduction for real property taxes paid or accrued within the taxable year. Sec. 164(a)(1); sec. 1.164-1(a)(1), Income Tax Regs. Section 55 imposes an alternative
The application of section 164 was modified during 1960 by the enactment of section 461(d), 7 Petitioner’s original reporting position for 1989 was to claim a $932,979 deduction for California franchise tax and no deduction for its short taxable year ended Dec.
Respondent also allowed deductions on Schedule A for State and local property taxes for all other properties, pursuant to section 164, and for interest paid on the Florida house mortgage, pursuant to section 163(h).
The application of section 164 was modified during 1960 by the enactment of section 461(d), which proscribes the accrual of State tax attributable to post-1960 State legislation that would accelerate the accrual of such tax.
Background Section 164 provides a deduction for real property taxes and other specified taxes paid or accrued by the taxpayer during the taxable year.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 -' from unlawful activity." Petitioners rely exclusively on Jay Hoyt's Federal.conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
Namely, Oregon Revised Statutes (ORS): (1) Section 164.085, theft by deception; (2) section 164.170, laundering a monetary instrument; and (3) section 164.172, engaging in a financial transaction in property derived - 56 - from unlawful activity.13 Petitioners rely exclusively on Jay Hoyt’s Federal conviction in Oregon to establish the elements of a theft under State law.
or incurred.3 3We note that petitioner claimed a $771 deduction for taxes on the Schedule F attached to his 1995 return, and a $67 deduction for mortgage interest on his 1996 Schedule F. Amounts for which a deduction is allowed under sec. 163(a) and sec. 164 are not start-up expenditures. Sec. 195(c)(1). Similarly, sec. 263A does not prevent petitioner from taking a current deduction for property taxes or mortgage interest. Sec. 263A(c)(5). Respondent did not question whether the deductions clai
(Section 164 does not apply to the employer’s payment of FICA and FUTA taxes.) The withheld Federal 6Federal income and FICA taxes withheld by an employer from an employee’s remuneration are considered to be part of that remuneration and deductible as such by the employer under sec. 162(a). - 16 - income and FICA taxes are reported quarterly on For
OPINION Deduction for Taxes Paid Under Section 164 Section 164 allows a deduction for certain taxes, including State and local property taxes.
t dispute that the additional tax applied to the distributions or the amount of the additional tax. Petitioners contend, however, that they are entitled to a deduction on their 1998 Federal income tax return in the amount of the additional tax under section 164. The tax for which the deduction here is claimed arises under section 72(t). Section 72(t) provides that if a taxpayer receives a distribution from a qualified retirement plan “the taxpayer’s tax under this chapter * * * shall be increase
Section 164 allows a deduction for certain taxes, including real property taxes, paid or accrued during the taxable year. - 51 - Sec. 164(a)(1). In the case of a mortgage loan for which the taxpayer is jointly liable with another person, a deduction for mortgage interest and property taxes is allowable to the persons or person who pays such intere
Property Taxes Section 164 allows a deduction for certain taxes, including State and local real property taxes.
haracterized as compensation for services earned by the individual Ps, and as U.S. source income to the individual Ps, except as to the two Ps who resided in Israel. Held, further, Ps are not entitled to seek a deduction for foreign taxes paid under sec. 164, I.R.C., in lieu of the disallowed foreign tax credits. Held, further, the individual Ps are liable for accuracy-related penalties pursuant to sec. 6662(a), I.R.C., but the corporate P is not. Robert J. Percy and Bruce Judelson, for petition
haracterized as compensation for services earned by the individual Ps, and as U.S. source income to the individual Ps, except as to the two Ps who resided in Israel. Held, further, Ps are not entitled to seek a deduction for foreign taxes paid under sec. 164, I.R.C., in lieu of the disallowed foreign tax credits. Held, further, the individual Ps are liable for accuracy-related penalties pursuant to sec. 6662(a), I.R.C., but the corporate P is not. Robert J. Percy and Bruce Judelson, for petition
Property Taxes Section 164 allows a deduction for certain taxes, including State and local real property taxes.
haracterized as compensation for services earned by the individual Ps, and as U.S. source income to the individual Ps, except as to the two Ps who resided in Israel. Held, further, Ps are not entitled to seek a deduction for foreign taxes paid under sec. 164, I.R.C., in lieu of the disallowed foreign tax credits. Held, further, the individual Ps are liable for accuracy-related penalties pursuant to sec. 6662(a), I.R.C., but the corporate P is not. Robert J. Percy and Bruce Judelson, for petition
haracterized as compensation for services earned by the individual Ps, and as U.S. source income to the individual Ps, except as to the two Ps who resided in Israel. Held, further, Ps are not entitled to seek a deduction for foreign taxes paid under sec. 164, I.R.C., in lieu of the disallowed foreign tax credits. Held, further, the individual Ps are liable for accuracy-related penalties pursuant to sec. 6662(a), I.R.C., but the corporate P is not. Robert J. Percy and Bruce Judelson, for petition
haracterized as compensation for services earned by the individual Ps, and as U.S. source income to the individual Ps, except as to the two Ps who resided in Israel. Held, further, Ps are not entitled to seek a deduction for foreign taxes paid under sec. 164, I.R.C., in lieu of the disallowed foreign tax credits. Held, further, the individual Ps are liable for accuracy-related penalties pursuant to sec. 6662(a), I.R.C., but the corporate P is not. Robert J. Percy and Bruce Judelson, for petition
Property Taxes Section 164 allows a deduction for certain taxes, including State and local real property taxes.
Neither section 164 nor regulations promulgated thereunder explicitly define the term “foreign income taxes”.
haracterized as compensation for services earned by the individual Ps, and as U.S. source income to the individual Ps, except as to the two Ps who resided in Israel. Held, further, Ps are not entitled to seek a deduction for foreign taxes paid under sec. 164, I.R.C., in lieu of the disallowed foreign tax credits. Held, further, the individual Ps are liable for accuracy-related penalties pursuant to sec. 6662(a), I.R.C., but the corporate P is not. Robert J. Percy and Bruce Judelson, for petition
haracterized as compensation for services earned by the individual Ps, and as U.S. source income to the individual Ps, except as to the two Ps who resided in Israel. Held, further, Ps are not entitled to seek a deduction for foreign taxes paid under sec. 164, I.R.C., in lieu of the disallowed foreign tax credits. Held, further, the individual Ps are liable for accuracy-related penalties pursuant to sec. 6662(a), I.R.C., but the corporate P is not. Robert J. Percy and Bruce Judelson, for petition
Neither section 164 nor regulations promulgated thereunder explicitly define the term “foreign income taxes”.
ract generally is voidable if one party's assent to the agreement is induced by a fraudulent or material misrepresentation by the other party to the contract. See Dorchester Indus. Inc. v. Commissioner, 108 T.C. 320, 335 (1997); 1 Restatement, supra sec. 164(1). A party's nondisclosure of a fact known to him is treated as an assertion that the fact does not exist where he knows that the disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party
ract generally is voidable if one party's assent to the agreement is induced by a fraudulent or material misrepresentation by the other party to the contract. See Dorchester Indus. Inc. v. Commissioner, 108 T.C. 320, 335 (1997); 1 Restatement, supra sec. 164(1). A party's nondisclosure of a fact known to him is treated as an assertion that the fact does not exist where he knows that the disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party
ract generally is voidable if one party's assent to the agreement is induced by a fraudulent or material misrepresentation by the other party to the contract. See Dorchester Indus. Inc. v. Commissioner, 108 T.C. 320, 335 (1997); 1 Restatement, supra sec. 164(1). A party's nondisclosure of a fact known to him is treated as an assertion that the fact does not exist where he knows that the disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party
Under section 164, a deduction is allowed for any State, local or foreign real property tax. See sec. 164(a)(1). Receipts produced by petitioners, however, in an attempt to substantiate their deduction, clearly state that the taxes were paid on March 17, 1997, not the year at issue. Respondent properly disallowed this deduction. III. Mortgage Interest Pe
ly if the activity were engaged in for profit, but such deductions may be taken only to the extent that any gross income generated from the activity exceeds deductions that are not dependent upon a profit objective (e.g., State and local taxes under section 164). Although a reasonable expectation of profit is not required, the facts and circumstances must indicate that the taxpayer entered into the activity or continued the activity with the actual and honest objective of making a profit. See Ke
ract generally is voidable if one party's assent to the agreement is induced by a fraudulent or material misrepresentation by the other party to the contract. See Dorchester Indus. Inc. v. Commissioner, 108 T.C. 320, 335 (1997); 1 Restatement, supra sec. 164(1). A party's nondisclosure of a fact known to him is treated as an assertion that the fact does not exist where he knows that the disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party
Property Taxes Section 164 allows a deduction for certain taxes, including State and local real property taxes.
ract generally is voidable if one party's assent to the agreement is induced by a fraudulent or material misrepresentation by the other party to the contract. See Dorchester Indus. Inc. v. Commissioner, 108 T.C. 320, 335 (1997); 1 Restatement, supra sec. 164(1). A party's nondisclosure of a fact known to him is treated as an assertion that the fact does not exist where he knows that the disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party
164; Mitchell v. Commissioner, T.C. Memo. 1983-155. As to the $9,748 balance of itemized deductions ($11,305 - $1,557), petitioners neither presented documentary evidence nor proffered specific and convincing testimony substantiating the deductions. Petitioners have failed to meet their burden of proof, and we sustain respondent's determinatio
y if the activity were engaged in for profit, but such deductions may be taken only to the extent that any gross income generated from the activity exceeds deductions which are not dependent upon a profit objective (e.g., State and local taxes under section 164). Although a reasonable expectation of profit is not required, the facts and circumstances must indicate that the taxpayer entered into the activity, or continued the activity, with the actual and honest objective of making a profit. Kean
ax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2116. Petitioner testified that the taxes, for which he claimed a deduction in the amount of $998, were State sales taxes and taxes imposed on utilities purchases. These taxes are not deductible under section 164. Respondent is sustained on this issue. Other Miscellaneous Deductions Petitioner claimed a deduction in the amount of $1,010 paid in connection with his sister-in-law's burial and service held at sea. Petitioner seems to argue that becau
y if the activity were engaged in for profit, but such deductions may be taken only to the extent that any gross income generated from the activity exceeds deductions which are not dependent upon a profit objective (e.g., State and local taxes under section 164). Although a reasonable expectation of profit is not required, the facts and circumstances must indicate that the taxpayer entered into the activity, or continued the activity, with the actual and honest objective of making a profit. Kean
According to the conference report, there previously was uncertainty as to whether certain taxes incurred in a trade or business or an income-producing activity could be deducted under section 164 or had to be capitalized under former section 189 or section 263.
and 165. For example, deductions for State and local property taxes incurred with respect to passive activities are subject to limitation under the passive loss rule whether such deductions are claimed above- the-line or as itemized deductions under section 164. [H. Conf. Rept. 99-841 (Vol. 2), at II-139, 1986-3 C.B. (Vol. 4) 139.] In this case, it is the treatment of the Texas rollback taxes that is in dispute. Therefore, if the portfolio income provisions are involved as respondent maintains,
According to the conference report, there previously was uncertainty as to whether certain taxes incurred in a trade or business or an income-producing activity could be deducted under section 164 or had to be capitalized under former section 189 or section 263.
A(b), deductions which are otherwise allowable without regard to any connection with a trade or business include the deduction for: (1) Interest under sec. 163, subject to the sec. 163(h)(1) personal interest restriction, (2) real estate taxes under sec. 164, and (3) casualty losses under sec. 165. - 24 - Commissioner, T.C. Memo. 1994-60, affd. without published opinion 78 F.3d 594 (9th Cir. 1996). As a general rule, section 280F(d)(4) treats any computer or peripheral equipment as listed proper
164; see Fife v. Commissioner, 73 T.C. 621 (1980). Petitioner has offered no evidence to substantiate the charitable contribution deduction claimed on Schedule A of his 1991 tax return. Since petitioner has not substantiated this claimed deduction, we sustain respondent's disallowance of the claimed deduction. - 24 - Petitioner deducted $2,85
Even so, the real estate taxes petitioner paid on these properties could be deductible under section 164 and allowable under section 183(b)(2).
porations may also claim a credit for the taxes deemed paid under sections 902 and 960 where the corporation owns at least 10 percent of a foreign corporation. If the election under section 901 is not made, a taxpayer may deduct the taxes paid under section 164. The overall limitation language of section 904 was added in 1921 as part of section 238(a) of the Revenue Act of 1921, ch. 136, 42 Stat. 227, 258, to prevent foreign tax credits from eliminating U.S. tax on domestic source income. Theo H
However, we also held that based upon the language quoted above this Court did have jurisdiction to redetermine the amount of the taxpayer's deduction for windfall profit tax under section 164 because “The deduction allowed by section 164 is a part of the calculation of ‘the tax imposed by subtitle A.’” Logan v.