Rev. Rul. 84-57

1984-1 C.B. 210, 1984-16 I.R.B. 7.

                       Internal Revenue Service
                                 Revenue Ruling

                                  LURES;  JIG

                           Published: April 16, 1984

Section 1502. - -Regulations [Consolidated Returns], 26 CFR 1.1502-32:  Investment adjustment.

Section 3101. - -Rate of Tax
Section 3111. - -Rate of Tax
Section 3121. - -Definitions
Section 4161. - -Imposition of Tax, 26 CFR 48.4161(a)-2:  Artificial lures, baits, and flies.

(Also Section 7805;  301.7805-1.)

  Lures;  jig.  A jig, consisting of a cadmium plated hook with an integral lead weight, designed to be used with artificial worms and grubs, is an artificial lure the sales of which are subject to the manufacturers excise tax imposed by section 4161(a) of the Code. Rev. Rul. 76-169 revoked.

FACTS

  The Internal Revenue Service has reconsidered Rev. Rul. 76-169, 1976-1 C.B. 342, which holds that a jig, described as a cadmium plated hook with an integral lead weight, is not an artificial lure within the meaning of section 4161(a) of the Internal Revenue Code.

LAW AND ANALYSIS

  Section 4161(a) of the Code imposes a tax on the sale by the manufacturer, producer, or importer of fishing rods, creels, reels, and artificial lures, baits and flies (including parts or accessories of such articles sold on or in connection therewith, or with the sale thereof).

  Section 48.4161(a)-2(d) of the Manufacturers and Retailers Excise Tax Regulations defines the term "artificial lures, baits, and flies" to include all artifacts, of whatever materials made, that simulate an article considered edible to fish, and that are designed to be attached to a line or hook to attract fish so that they may be captured.  Thus, the term includes such artifacts as imitation flies, blades, spoons, spinners, etc., and edible materials that have been processed so as to resemble a different edible article considered more attractive to fish, such as bread crumbs treated so as to simulate salmon eggs, and pork rind cut and dyed to resemble frogs, eels or tadpoles.

  Rev. Rul. 76-169 holds that a jig, described as a cadmium plated hook with an integral lead weight, is not an artificial lure because it does not attract fish;  the artificial worms and grubs used with the jig attract the fish.

  In Herring Magic v. United States, 258 F.2d 197 (9th Cir.1958), the court held that a fishing device called Herring Magic was an artificial lure.  The device consisted of a piece of odorless, colorless plastic with hooks attached.  It was designed to be used with the head and body of a dead minnow or herring, which had to be fastened inside the device.  It was not functional without the attached bait.  When the device was trolled through the water with the attached dead fish, it produced a swimming action claimed to be identical to that of a live fish.

  In Hine v. United States, 113 F.Supp. 340 (Ct.Cl.1953) the court held that kits containing materials from which a fishing rod might be assembled were "fishing rods", the sales of which were subject to the manufacturers excise tax, even though the purchaser was required to provide and install certain items not contained in the kit.  The court held that "having reached the stage of manufacture or development where they became recognizable as one of the sporting goods described in  ..  (the Code) the rods upon being sold were subject to tax even though there remained one or more finishing operations to be performed."  133 F.Supp. at 343.  The court used the words "fishing rods" in the ordinary and usual sense, and found that the items sold by the taxpayer would be known as "fishing rods" by the majority of people.  Furthermore, the items had no practical use other than as fishing rods.

  The article described in Rev. Rul. 76-169 is a lead head jig and simply requires the addition of an artificial worm or grub or feathers or hair to use it to catch a fish.  Like the kit in Hine, or the Herring Magic device, the bare jig has reached the stage of manufacture where it is recognizable as an artificial lure even though one or more finishing operations (addition of artificial worms or grubs) remains to be performed.  The bare jig has no practical use other than as an artificial lure.  Although the bare

jig may look like a hook, it is not sold as a hook, nor is it intended to be used as a hook.  It is designed and marketed as an artificial lure.

HOLDING

  The jig described in Rev. Rul. 76-169 is an artificial lure, the sales of which are subject to the manufacturers excise tax imposed by section 4161(a) of the Code.

EFFECT ON OTHER REVENUE RULINGS

  Rev. Rul. 76-169 is revoked.

PROSPECTIVE APPLICATION

  Under the authority granted by section 7805(b) of the Code, this revenue ruling is effective with respect to sales made by the manufacturer on or after July 1, 1984.

Rev. Rul. 84-57, 1984-1 C.B. 210, 1984-16 I.R.B. 7.