Rev. Rul. 55-289

The tax imposed by the State of Mississippi, section 10174 of the Mississippi Code, as amended by House Bill No. 678, April 13, 1954, Cumulative Supplement to Mississippi Code 1942 Annotated, Volume 7A recompiled, upon the sale, use, gift, possession or consumption of cigarettes, cigars and smoking tobacco, the impact or burden of which is declared to be upon `the vendee, user, consumer or possessor of cigarettes within the State of Mississippi' is deductible under section 23(c)(1) of the Internal Revenue Code of 1939 by the consumer or ultimate user to the extent that the amount of the tax is paid to the vendor by the vendee. However, in the case of an individual who elects to use the optional standard deduction, no deduction is allowable unless the tax is attributable to a trade or business carried on by him. If the tax is attributable to a trade or business carried on by the individual the amount of the tax is deductible from gross income in computing adjusted gross income within the meaning of section 22(n) of the Code, provided the trade or business does not consist of the performance of a service as an employee. Effective April 13, 1954, no deduction is allowable to the wholesaler and no portion of the price paid by the consumer or ultimate user for such products which represents the taxes thereon is includible in the gross income of the wholesaler