[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: 26CFR1.164-4]

[Page 885]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.164-4  Taxes for local benefits.

    (a) So-called taxes for local benefits referred to in paragraph (g) 
of Sec. 1.164-2, more properly assessments, paid for local benefits 
such as street, sidewalk, and other like improvements, imposed because 
of and measured by some benefit inuring directly to the property against 
which the assessment is levied are not deductible as taxes. A tax is 
considered assessed against local benefits when the property subject to 
the tax is limited to property benefited. Special assessments are not 
deductible, even though an incidental benefit may inure to the public 
welfare. The real property taxes deductible are those levied for the 
general public welfare by the proper taxing authorities at a like rate 
against all property in the territory over which such authorities have 
jurisdiction. Assessments under the statutes of California relating to 
irrigation, and of Iowa relating to drainage, and under certain statutes 
of Tennessee relating to levees, are limited to property benefited, and 
if the assessments are so limited, the amounts paid thereunder are not 
deductible as taxes. For treatment of assessments for local benefits as 
adjustments to the basis of property, see section 1016(a)(1) and the 
regulations thereunder.
    (b)(1) Insofar as assessments against local benefits are made for 
the purpose of maintenance or repair or for the purpose of meeting 
interest charges with respect to such benefits, they are deductible. In 
such cases, the burden is on the taxpayer to show the allocation of the 
amounts assessed to the different purposes. If the allocation cannot be 
made, none of the amount so paid is deductible.
    (2) Taxes levied by a special taxing district which was in existence 
on December 31, 1963, for the purpose of retiring indebtedness existing 
on such date, are deductible, to the extent levied for such purpose, if 
(i) the district covers the whole of at least one county, (ii) if at 
least 1,000 persons are subject to the taxes levied by the district, and 
(iii) if the district levies its assessments annually at a uniform rate 
on the same assessed value of real property, including improvements, as 
is used for purposes of the real property tax generally.

[T.D. 6780, 29 FR 18147, Dec. 22, 1964]