[Code of Federal Regulations]
[Title 26, Volume 16]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR48.4216(a)-3]

[Page 147-148]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 48_MANUFACTURERS AND RETAILERS EXCISE TAXES--Table of Contents
 
     Subpart M_Special Provisions Applicable to Manufacturers Taxes
 
Sec. 48.4216(a)-3  Other items relating to tax on sale price.

    (a) Exchanges. If, in connection with the sale of an article subject 
to a tax imposed under Chapter 32 on the price

[[Page 148]]

for which sold, a manufacturer receives from its vendee another article 
in exchange, the tax on the manufacturer's sale shall be computed on the 
basis of the amount allowed for the article received from the vendee, 
plus any additional amount charged the vendee.
    (b) Replacements under warranty. If an article, subject to a tax 
imposed under Chapter 32 on the price for which sold, is returned to the 
manufacturer by reason of the failure of the article under a warranty as 
to its quality or service, and a new article is given by the 
manufacturer, free, or at a reduced price, the tax on the new article 
shall be computed on the actual amount, if any, to be paid to the 
manufacturer for the new article. See paragraph (b)(2) of Sec. 
48.6416(b)-1 for the circumstances under which the allowance made by the 
manufacturer, producer, or importer upon the return of the first article 
constitutes a price readjustment of the sale price of first article and 
the extent, if any, to which a credit may be allowed, or refund made, of 
the tax paid by the manufacturer, producer, or importer on the sale of 
the first article.
    (c) Readjustments in sale price. Readjustment in sale price (such as 
allowable discounts, rebates, bonuses, etc.) cannot be anticipated. The 
tax must be based upon the original price unless the readjustments have 
actually been made prior to the close of the period for which the tax 
upon the sale is returned. However, if the price upon which the tax was 
computed is subsequently readjusted, credit may be taken against the tax 
due on a subsequent return or a claim for refund filed as provided by 
section 6416(b)(1) and the regulations thereunder.

[T.D. 7536, 43 FR 13519, Mar. 31, 1978]