Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 67-13

1967-1 C.B. 46

Section 368 -- Corporate Reorganizations

Sec. 164

Full Text

Rev. Rul. 67-13

Chapter 8.1 of the Code of Virginia imposes a general sales and use tax at the rate of 2 percent. This is to be increased to 3 percent on and after July 1, 1968. Also, under chapter 8.1 a city or county may levy a local sales tax at the rate of 1 percent, subject to the general sales tax provisions of this chapter. Chapter 12.1 of the Code of Virginia imposes a 2-percent sales and use tax in regard to the purchase or use of a motor vehicle in the State of Virginia. This is in lieu of the general sales and use tax referred to above.

Held , the taxes imposed by the general sales and use tax statute qualify as general sales and compensating use taxes under section 164(b) of the Internal Revenue Code of 1954 and are deductible under section 164(a) of the Code.

Held further , any sales tax imposed by a city or county pursuant to section 58-441.49 of chapter 8.1 of the Code of Virginia, and the Model Ordinance Guide prepared thereunder, will be deductible under section 164(a) of the Code for Federal income tax purposes.

Held further , the motor vehicle sales and use tax is deemed part of the general sales tax pursuant to section 1.164-3(g)(1) of the Income Tax Regulations and therefore deductible under section 164(a) of the Code.

However, where any of the above taxes is paid or accrued by an individual other than in connection with a trade or business carried on by him, it is deductible only if the standard deduction or the optional tax table is not used.