Rev. Rul. 87-85

1987-2 C.B. 251, 1987-36 I.R.B. 7.

ACT OF MANUFACTURE OR FURTHER MANUFACTURE; APPLICABILITY OF MANUFACTURERS

TAX REVENUE RULINGS TO RETAILERS TAX

Published: September 8, 1987

SECTION 4051. - IMPOSITION OF TAX ON HEAVY TRUCKS AND TRAILERS SOLD AT RETAIL, 26 CFR 145.4051-1: Imposition of tax on heavy trucks and trailers sold at retail.

(Also Sections 4052, 4221; 145.4052-1, 48.4221-2.)

  Act of manufacture or further manufacture; applicability of manufacturers tax revenue rulings to retailers tax. Revenue rulings are listed which were issued under section 4061(a)(1) of the Code and that are also applicable to section 4051(a)(1) to the extent that they determine whether a particular operation is, or is not, an act of manufacture or further manufacture.

  The Internal Revenue Service has reviewed those rulings previously published in the Internal Revenue Bulletin that defined the terms 'manufacture' and 'further manufacture' for purposes of the manufacturers excise tax formerly imposed by section 4061(a) of the Internal Revenue Code, and the Service had identified those rulings that are also applicable under the retailers excise tax now imposed by section 4051(a).

  Section 4061(a)(1) of the Code, repealed effective April 1, 1983, imposed a 10 percent tax on the sale by the manufacturer, producer, or importer of specified articles, including certain truck bodies and chassis, truck trailers and semitrailers, and highway truck tractors. Section 4051(a)(1), effective April 1, 1983, imposes a 12 percent tax on the first retail sale of most of the articles previously subject to the section 4061 tax.

  Section 4221(a)(1) of the Code, applicable to both sections 4061(a)(1) and 4051(a)(1), provides that no tax shall be imposed on the sale by the manufacturer (or under section 4051 on the first retail sale) of an article 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.

  Section 4221(d)(6)(A) of the Code provides that an article shall be treated as sold for use in further manufacture if such article is sold for use by the purchaser as material in the manufacture or production of, or as a component part of, another article taxable under chapter 32 of the Code to be manufactured or produced by the purchaser.

  Section 4052(c) of the Code provides that for purposes of the tax imposed by section 4051 a person, in general, shall not be treated as engaged in the manufacture of any article by reason of merely combining such article with any coupling device (including any fifth wheel), wrecker crane, loading and unloading equipment (including any crane, hoist, winch, or power liftgate), aerial ladder or tower, snow and ice control equipment, earthmoving, excavation and construction equipment, spreader, sleeper cab, cab shield, or wood or metal floor. Section 4063(d) previously provided the same for purposes of the tax imposed by section 4061.

  The Service has determined that the following revenue rulings, which were issued under section 4061(a)(1) of the Code, are also applicable to section 4051(a)(1) to the extent that they determine whether a particular operation is, or is not, an act of manufacture or further manufacture:

Rev. Rul. No.                                C.B. Citation
58-582                                            1958-2 C.B. 768
60-155                                            1960-1 C.B. 410
60-228                                            1960-2 C.B. 296
60-271                                            1960-2 C.B. 332
60-310    (as distinguished by Rev. Rul. 75-509,
           1975-2 C.B. 420.)                       1960-2 C.B. 334
63-128                                            1963-2 C.B. 476
64-335    (Situation 1 only)                      1964-2 C.B. 413
68-40                                             1968-1 C.B. 452
69-186                                            1969-1 C.B. 285
69-418                                            1969-2 C.B. 195
69-419    (application limited to restoration
           of milk tank bodies)                    1969-2 C.B. 197
71-584                                            1971-2 C.B. 358
74-262                                            1974-1 C.B. 305
75-129                                            1975-1 C.B. 336
75-276                                            1975-2 C.B. 432
75-329                                            1975-2 C.B. 484
75-509    (as modified by Rev. Rul. 82-157,
           1982-2 C.B. 288.)                       1975-2 C.B. 420
76-129                                            1976-1 C.B. 332
77-101    (Situation 1 only)                      1977-1 C.B. 315
78-33     (Situations 1 and 3 only)               1978-1 C.B. 342
78-187                                            1978-1 C.B. 347
78-205                                            1978-1 C.B. 345
78-217    (as modified by Rev. Rul. 82-157,
           1982-2 C.B. 288.)                       1978-1 C.B. 346
78-311                                            1978-2 C.B. 260
79-191                                            1979-1 C.B. 338
79-192                                            1979-1 C.B. 340
79-253                                            1979-2 C.B. 368
79-254                                            1979-2 C.B. 369
82-157                                            1982-2 C.B. 288
83-149                                            1983-2 C.B. 186

  This revenue ruling does not reach a determination as to the applicability to section 4051(a)(1) of the Code of any other conclusions in these revenue rulings and should not be interpreted as being all inclusive insofar as whether an act of manufacture of further manufacture has occurred.

Rev. Rul. 87-85, 1987-2 C.B. 251, 1987-36 I.R.B. 7