[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.164-2]

[Page 881-882]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.164-2  Deduction denied in case of certain taxes.

    This section and Sec. 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:

[[Page 882]]

    (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, war profits, and excess profits taxes. 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 credit for taxes of foreign countries and possessions of the United 
States.
    (e) Real property taxes. Taxes on real property, to the extent that 
section 164(d) and Sec. 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 Sec. 
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 Sec. 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.

[T.D. 6780, 29 FR 18145, Dec 22, 1964, as amended by T.D. 7767, 46 FR 
11263, Feb. 6, 1981]