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Mahler v. Tremper, 243 P.2d 627, 629-630 (Wash. 1952), the
Supreme Court of the State of Washington held that a county tax
on the sale of real estate is an excise tax and not a property
tax because it is a tax on the transaction rather than merely
ownership. Moreover, this Court has held on several occasions
that so-called transaction privilege taxes concerning the
transfer of property are not deductible under section 164(a)(1)
because such taxes are not imposed on interests in property. See
Black v. Commissioner, 60 T.C. 108 (1973) (Pennsylvania State
real estate tax imposed on the transfer of property is not
imposed on an interest in real property); Gibbons v.
Commissioner, T.C. Memo. 1976-125 (Maryland State real estate
transfer tax on the purchase of a home is not a deductible real
property tax); cf. Beimfohr v. Commissioner, T.C. Memo. 1986-57
(a transaction privilege tax on a contractor’s gross proceeds of
sales less land and labor costs is an excise tax on the privilege
to engage in an occupation or business rather than a tax imposed
on an interest in real property). We continue to follow these
precedents.
Petitioners argue, however, that Washington State’s real
estate excise tax is a form of real property tax because the
State of Washington does not have a general State income tax
unlike most States. The fact that Washington State does not have
a general State income tax, however, is not determinative of
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