Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 62-61

1962-1 C.B. 221

Caution: Obsoleted by Rev. Rul. 69-227

IRS Headnote

Billiard and pool balls and cues may not be sold tax-free to a manufacturer of billiard and pool tables who assembles a table, balls, and cues, and sells them together in a package. The manufacturer of the balls and cues is liable for the tax on sporting goods, imposed by section 4161 of the Internal Revenue Code of 1954, on his sale of the balls and cues. Furthermore, the manufacturer is liable for the tax regardless of whether the cues contain leather tips or fibre ferrules.

Full Text

Rev. Rul. 62-61

Advice has been requested whether billiard and pool balls and cues may be sold tax-free under the circumstances described below.

A manufacturer of billiard balls and cues sells balls and cues to a manufacturer of billiard and pool tables who assembles a table, balls, and cues, and sells them together in a package. Some of the cues, when sold by the cue manufacturer, do not have leather tips or fibre ferrules at the points.

Section 4161 of the Internal Revenue Code of 1954 imposes a tax upon the sale by the manufacturer, producer, or importer of certain enumerated articles of sporting goods, including in each case parts or accessories of such articles sold on or in connection therewith, or with the sale thereof. Included in the articles enumerated are `billiard and pool tables (measuring 45 inches overall or more in length) and balls and cues for such tables.'

Under the provisions of section 4221(a)(1) of the Code, the manufacturers excise tax is not imposed on the sale by the manufacturer of taxable articles for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by such second purchaser in further manufacture, if such use is to occur before any other use. In accordance with section 4221(d)(6)(A) of the Code, articles taxable under Chapter 32 of the Code are to be treated as sold for use in further manufacture if such articles are sold for use by the purchaser as material in the manufacture or production of, or as a component part of, another article subject to the manufacturers excise tax, to be manufactured or produced by him.

Billiard and pool balls and cues taxable under section 4161 of the Code are not considered to be components used in the further manufacture of billiard and pool tables within the meaning of section 4221 of the Code. Under the circumstances described above, the balls and cues are merely purchased and resold by the table manufacturer in the form purchased.

Accordingly, it is held that billiard and pool balls and cues may not be sold tax-free to a manufacturer of billiard and pool tables who assembles a table, balls, and cues, and sells them together in a package. The manufacturer of the balls and cues is liable for the tax on sporting goods, imposed by section 4161 of the Code, on his sale of such balls and cues. Furthermore, the cue manufacturer is liable for the tax regardless of whether the cues contain leather tips or fibre ferrules.

The billiard or pool table manufacturer who sells tables of his manufacture and resells balls and cues, purchased taxpaid, in combination with his tables is liable for tax under section 4161 of the Code only on his sale of the tables. The portion of the price charged for the combination which is allocable to the tables for purposes of computing the tax is to be determined in each instance in accordance with the method described in  Revenue Ruling 60-259, C.B. 1960-2, 318.