CH. 1—NORMAL TAXES AND SURTAXES
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SEC. 164. TAXES. (a) GENERAL RULE. — E x c e p t as otherwise provided in this section,
there shall be allowed as a deduction taxes paid or accrued within the taxable year. (b) DEDUCTION D E N I E D I N C A S E OP CERTAIN T A X E S. — N o deduction shall be allowed for the following taxes: (1) Federal income taxes, including— (A) the tax imposed by section 3101 (relating to the tax on employees under the Federal Insurance Contributions Act); (B) the taxes imposed by sections 3201 and 3211 (relating to the taxes on railroad employees and railroad employee representatives); and (C) the tax withheld a t source on wages under section 3402, and corresponding provisions of prior revenue laws. (2) Federal war profits and excess profits taxes. (3) Federal import duties, and Federal excise and stamp taxes (not described in paragraph (1), (2), (4), or (5)); b u t this paragraph shall not prevent such duties and taxes from being deducted under section 162 (relating to trade or business expenses) or section 212 (relating to expenses for the production of income). (4) Estate, inheritance, legacy, succession, and gift taxes. (5) Taxes assessed against local benefits of a kind tending to increase the value of the property assessed; b u t this paragraph shall not prevent— (A) the deduction of so much of such taxes as is properly allocable to maintenance or interest charges; or (B) the deduction of taxes levied by a special taxing district if— (i) the district covers the whole of a t least one county; (ii) at least 1,000 persons are subject to the taxes levied by the district; and (iii) the district levies its assessments annually a t a uniform rate on the same assessed value of real property, including improvements, as is used for purposes of the real property tax ': generally. (6) Income, war profits, and excess profits taxes imposed by the authority of any foreign country or possession of the United States, if the taxpayer chooses to take to any extent the benefits of section 901 (relating to the foreign tax credit). (7) Taxes on real property, to the extent that subsection (d) requires such taxes to be treated as imposed on another taxpayer. (c) CERTAIN R E T A I L SALES T A X E S AND GASOLINE T A X E S. — (1) GENERAL RULE. — I n the case of any State or local sales tax,
if the amount of the tax is separately stated, then, to the extent that the amount so stated is paid by the consumer (otherwise than in connection with the consumer's trade or business) to his seller, such amount shall be allowed as a deduction to the consumer as if it constituted a tax imposed on, and paid by, such consumer. (2) DEEINITIGN.—For purposes of paragraph (1), the term "State or local sales tax " means a tax imposed by a State, a Territory, a possession of the United States, or a political subdivision of any of the foregoing, or by the District of Columbia, which tax— 1164(c)(2)
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