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(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). * * *
Section 164(a) does not mention Federal income taxes. On
the other hand, section 275(a)(1) provides, inter alia, that no
deduction shall be allowed for Federal income taxes. It is,
therefore, clear that petitioners may not deduct the tax imposed
by section 72(t). See Escofil v. Commissioner, 464 F.2d 358 (3d
Cir. 1972), affg. T.C. Memo. 1971-131; White v. Commissioner,
T.C. Memo. 1979-6.
Petitioners claim that the instruction booklet (“1040 Forms
and Instructions”) they used in the preparation of their return
is misleading. Putting aside the point that the statute is clear
and is controlling, the instructions to which petitioners refer
clearly provides that a taxpayer may not deduct Federal income
taxes.
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Last modified: May 25, 2011