Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 70-39

1970-1 C.B. 35

Sec. 164

Sec. 266

IRS Headnote

The general sales and use taxes imposed by Article 32, Chapter 226, of the Vermont Statutes Annotated, are deductible under section 164(a) of the Code.

Full Text

Rev. Rul. 70-39

Article 32, Chapter 226, of the Vermont Statutes Annotated imposes a general sales tax and a use tax at the rate of three percent effective June 1, 1969, on the sale at retail of a broad range of classes of items.

Held, these taxes are general sales and compensating use taxes deductible under section 164 of the Internal Revenue Code of 1954 in computing taxable income for the taxable year within which paid or accrued.

Held further, in the case of a taxpayer who elects to use the standard deduction or the optional tax table, a deduction is not allowable unless the sales tax or the use tax is attributable to a trade or business carried on by him, other than a trade or business consisting of the performance of services as an employee. If the sales tax or the use tax is attributable to such trade or business carried on by the individual, the amount of tax is deductible from his gross income in computing adjusted gross income under section 62 of the Code.