Rev. Rul. 55-266

The tax imposed by the State of Nebraska, section 77-2602 and section 77-2616 of Article 26 of Revised Statutes of Nebraska, 1943, Reissue of 1950, on cigarettes distributed and sold at wholesale and on the use of all cigarettes in the State evidenced by stamps affixed to the containers or printed thereon by the use of a cigarette tax meter is deductible for Federal income tax purposes under section 164 of the Internal Revenue Code of 1954 by the wholesale distributor or wholesale dealer or the user who pays for and affixes the stamp or meter impressions. The tax is not a retail sales tax imposed on persons selling tangible personal property at retail and is not deductible under section 164(c) of the Code by the consumer or purchaser of the cigarettes. Insofar as the ultimate consumer or purchaser is concerned the tax represents an additional cost of the article and is not deductible as a tax in computing his taxable income except where imposed directly upon him as a use tax. Compare I.T. 3669, C.B. 1944, 112, relating to motor vehicle fuel taxes imposed by the State of Nebraska