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TITLE 26-INTERNAL REVENUE CODE "(1) In general.-Except as provided in paragraph (2), the amendments made by subsection (a) [to sub- secs. (d)(1), (2), (3)(A), (E), (5) to (7) of this section] shall apply to taxable years beginning after December 31, 1975. "(2) Indebtedness incurred before September 11, 1975.-In the case of indebtedness attributable to a specific item of property which- "(A) is for a specified term, and "(B) was incurred before September 11, 1975, or is Incurred after September 10, 1975, pursuant to a written contract or commitment which on Septem- ber 11, 1975, and at all times thereafter before the incurring of such indebtedness, is binding on the taxpayer, the amendments made by this section shall not apply, but section 163(d) of the Internal Revenue Code of 1954 [subsec. (d) of this section] (as in effect before the enactment of this Act [Oct. 4, 1976]) shall apply. For purposes of the preceding sentence, so much of the net Investment income (as defined in section 163(d)(3)(A) of such Code) [subsec. (d)(3)(A) of this section] for any taxable year as is not taken into ac- count under section 163(d) of such Code, as amended by this Act [subsec. (d) of this section], by reason of the last sentence of section 163(d)(3)(A) of such Code [subsec. (d)(3)(A) of this section], shall be taken into account for purposes of applying such section [this section] as in effect before the date of enactment of this Act [Oct. 4, 1976] with respect to interest on in- debtedness referred to in the preceding sentence." Amendment of subsec. (d)(3)(B)(ii) by section 205(c)(3) of Pub. L. 94-455 applicable with respect to taxable years ending after Dec. 31, 1975, see section 205(e) of Pub. L. 94-455, set out as an Effective Date note under section 1254 of this title. EFFECTIVE DATE OF 1971 AMENDMENT Amendment of subsec. (d)(1)(B), (3)(C), and (4)(A)(i) and enactment of subsec. (d)(7) by Pub, L. 92-178 ap- plicable to taxable years beginning after Dec. 31, 1971, see section 304(e) of Pub. L. 92-178, set out as an Ef- fective Date of 1971 Amendment note under section 57 of this title. ErFEcTIvE DATE OF 1969 AMENDMENT Section 221(b) of Pub. L. 91-172 provided that: "The amendments made by this section [adding subsec. (d) of this section] shall apply to taxable years beginning after December 31, 1971." EFFECTIvE DATE OF 1964 AMENDMENT Section 224(d) of Pub. L. 88-272 provided that: "The amendments made by subsections (a) [adding section 483 of this title] and (b) [to the analysis preceding sec- tion 481 of this title] shall apply to payments made after December 31, 1963, on account of sales or ex- changes of property occurring after June 30, 1963, other than any sale or exchange made pursuant to a binding written contract (including an irrevocable written option) entered into before July 1, 1963. The amendinents made by subsection (c) [to subsec, (b)(1) of this section] shall apply to payments made during taxable years beginning after December 31, 1963." EFcTivE DATE OF 1963 AMENDmENT Subsec. (c) effective as of Jan. 1, 1962, and applicable with respect to taxable years ending on or after such date, see section 2 of Pub. L. 88-9, set out as an Effec- tive Date note under section 1055 of this title. CROSS REFERENCES Expenses and interest relating to tax-exempt income, see section 265 of this title. Interest as income, see section 61 of this title. Interest deductions- Amortizable bond premium, see section 171 of this title. Cooperative housing corperation, tenant-stock- holder, see section 216 of tho title. Local benefit assessments, see section 164 of this title. Recipients of income in respect of decedents, see section 691 of this title. Tax-exempt income, see section 265 of this title. Tax-free, see section 284 of this title. Unpaid, see section 267 of this title. Taxable year deduction to be taken, see section 461 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 216, 267, 483, 691, 703, 809, 832 of this title. § 164. Taxes (a) General rule Except as otherwise provided in this section, the following taxes shall be allowed as a deduc- tion for the taxable year within which paid or accrued: (1) State and local, and foreign, real proper- ty taxes. (2) State and local personal property taxes. (3) State and local, and foreign, income, war profits, and excess profits taxes. (4) State and local general sales taxes. (5) State and local taxes on the sale of gaso- line, diesel fuel, and other motor fuels. In addition, there shall be allowed as a deduc- tion State and local, and foreign, taxes not de- scribed in the preceding sentence which are paid or accrued within the taxable year in car- rying on a trade or business or an activity de- scribed in section 212 (relating to expenses for production of income). (b) Definitions and special rules For purposes of this section- (1) Personal property taxes The term "personal property tax" means an ad valorem tax which is imposed on an annual basis in respect of personal property. (2) General sales taxes (A) In general The term "general sales tax" means a tax imposed at one rate in respect of the sale at retail of a broad range of classes of items. (B) Special rules for food, etc. In the case of items of fopd, clothing, medical supplies, and motor vehicles- (I) the fact that the tax does not apply in respect of some or all of such items shall not be taken into account in deter- mining whether the tax applies in respect of a broad range of classes of items, and (i) the fact that the rate of tax applica- ble in respect of some or all of such items is lower than the general rate of tax shall not be taken into account in determining whether the tax is imposed at one rate. (C) Items taxed at different rates Except in the case of a lower rate of tax applicable in respect of an item described in subparagraph (B), no deduction shall be al- lowed under this section for any general sales tax imposed in respect of an item at a rate other than the general rate of tax. (D) Compensating use taxes A compensating use tax in respect of an item shall be treated as a general sales tax. Page 145 § 164