[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(b)-1]

[Page 148-149]
 
                       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(b)-1  Constructive sale price; scope and application.

    (a) In general. Section 4216(b) pertains to those taxes imposed 
under Chapter 32 that are based on the price for which an article is 
sold, and contains the provisions for constructing a tax base other than 
the actual sale price of the article, under certain defined conditions.
    (b) Specific applications. (1) Section 4216(b)(1) applies to:
    (i) Arm's-length sales at retail or on consignment, other than those 
sales at retail and to retailers to which section 4216(b)(2) and Sec. 
48.4216(b)-3 apply; and
    (ii) Sales otherwise than at arm's length, and at less than fair 
market price.
    (2) Section 4216(b)(2) applies generally to arm's-length sales of an 
article at retail or to retailers, or both, where the manufacturer also 
sells the same article to wholesale distributors.
    (3) Section 4216(b)(3) provides a formula for determining a 
constructive sale price for sales of taxable articles between members of 
an affiliated group of corporations (as ``affiliated group'' is defined 
in section 1504(a)) in those instances where the purchasing corporation 
regularly resells to retailers but does not regularly resell to 
wholesale distributors, and except for situations where section 4216(b) 
(4) or (5) applies.
    (4) Section 4216(b)(4) provides a special method for computing a 
constructive sale price for sales of taxable articles between affiliated 
corporations where the purchasing corporation sells only to retailers, 
and the normal method of selling within the industry is for 
manufacturers to sell to wholesale distributors.
    (5) Section 4216(b)(5) provides a special method for computing a 
constructive sale price for sales of articles subject to a tax imposed 
by section 4061(a) (trucks, buses, tractors, etc.) between affiliated 
corporations, where the purchasing corporation regularly sells such 
articles in arm's-length transactions to independent retailers.
    (c) Definitions. For purposes of section 4216(b) and the regulations 
thereunder and unless otherwise indicated:
    (1) Sale at retail. A ``sale at retail,'' or a ``retail sale'', is a 
sale of an article to a purchaser who intends to use or lease the 
article rather than resell it. The fact that articles are sold in 
wholesale lots, or at wholesale prices, will not change the character of 
such sales as ``sales at retail'' if the purchaser is not engaged in the 
business of reselling such articles, and acquires them for the purpose 
of using them rather than reselling them.
    (2) Retail dealers. A ``retail dealer'', or ``retailer'', is a 
person engaged in the business of selling articles at retail.

[[Page 149]]

    (3) Wholesale distributor. The term ``wholesale distributor'' means 
a person engaged in the business of selling articles to persons engaged 
in the business of reselling such articles.

[T.D. 7613, 44 FR 23824, Apr. 23, 1979]