Rev. Rul. 56-327

The privilege tax imposed by the City of Memphis, Tennessee, Ordinance 375, effective on and after June 1, 1955, on the retail purchase of alcoholic beverages is a levy on the consumer and is deductible under section 164(a) of the Internal Revenue Code of 1954 by the consumer in computing taxable income, except that in the case of an individual who elects the standard deduction as provided by section 144 of the Code (or uses the tax table), the tax is not deductible unless attributable to a trade or business carried on by him. In the latter event, the tax is deductible from gross income in computing adjusted gross income.

The tax on alcoholic beverages under Ordinance 375 does not supplant or change the nature of the tax imposed by City of Memphis, Ordinance 271. The tax imposed under Ordinance 271, effective on and after July 1, 1953, on the sale of beer at wholesale, is expressly levied on the wholesaler and is not deductible by the consumer either as a tax under section 164(a) of the Code or as a retail sales tax under section 164(c) of the Code.