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rollback taxes to SLR's portfolio income--its recognized gain on
the sale of the Property.
Section 164(a) provides:
SEC. 164. TAXES.
(a) General Rule.--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:
(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) The GST tax imposed on income distributions.
(5) The environmental tax imposed by section 59A.
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.
Thus, in the first sentence section 164 itemizes a number of
taxes (including real property taxes) that are allowed as a
deduction for the taxable year within which they are paid or
accrued. The second sentence allows as a deduction certain
additional taxes which are paid or accrued within the taxable
year in carrying on a trade or business or incurred for the
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Last modified: May 25, 2011