[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(d)-1]

[Page 154]
 
                       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(d)-1  Sales of installment accounts.

    (a) In general. Except as provided in paragraph (d) of this section, 
in case of a sale or other disposition by a manufacturer, producer, or 
importer of an installment account of the type specified in section 
4216(c), the tax shall not apply to subsequent installment payments on 
such account. Instead, there shall be paid an amount equal to the 
difference between the tax previously paid on such installment account 
and the total tax computed by applying:
    (1) To each installment due before the sale of the installment 
account, the rate of tax applicable at the time payment thereof was due, 
and
    (2) To each installment, the time for payment of which has not 
arrived, the rate of tax which, under the provisions of Chapter 32 as in 
effect on the date of the sale of the installment account, is (or is to 
be) in effect on the date such installment is due.

However, see paragraph (b) of this section if the sale is made in a 
bankruptcy or insolvency proceeding. The tax due under this paragraph 
shall be included in the return for the period in which the account is 
sold.
    (b) Sale in bankruptcy or insolvency proceeding. In the case of a 
sale of an installment account of a manufacturer, producer, or importer 
pursuant to the order of, or subject to the approval of, a court of 
competent jurisdiction in a bankruptcy or insolvency proceeding, the 
amount of tax due shall be computed and paid as provided in paragraph 
(a) of this section but shall not exceed the amount of tax computed by 
multiplying (1) the proportionate share of the amount for which such 
accounts are sold which is allocable to each unpaid installment payment, 
by (2) the rate of tax which, under the provisions of chapter 32 as in 
effect on the date of the sale of the installment account, is (or is to 
be) in effect on the date such payment is due.
    (c) Collection of installment accounts on behalf of the 
manufacturer. Where a manufacturer, producer, or importer retains title 
to an installment account but turns it over to another person for 
collection on a fee basis, no sale of such account (or other disposition 
as contemplated in section 4216(d)) has been made. The tax shall 
continue to be paid as provided by section 4216(c).
    (d) Returned installment accounts. Where an installment account 
which has been sold or otherwise disposed of is returned to the 
manufacturer, producer, or importer who sold it under an agreement under 
which the account was sold, and credit or refund has been allowed under 
section 6416(b)(5) and the regulations thereunder, the manufacturer, 
producer, or importer shall pay tax as provided by section 4216(c) and 
Sec. 48.4216(c)-1 on any subsequent payments made on such returned 
installment account until such time as there shall have been paid the 
total tax liability with respect to the account as computed under 
paragraph (a) of this section.
    (e) Limitation. The sum of the amounts payable under this section 
and Sec. 48.4216(c)-1 on an installment account shall not exceed the 
total amount of tax which would be payable if such installment account 
had not been sold or otherwise disposed of (computed as provided in 
subsection (c)).
    (f) Applicability of paragraphs (a) and (b) of this section. The 
rules set forth in paragraphs (a) and (b) of this section apply in the 
case of installment accounts sold after June 21, 1965. In the case of 
installment accounts sold before June 22, 1965, paragraph (b) of this 
section shall be applied by substituting, in lieu of subparagraph (2) 
thereof, ``the rate of tax, as set forth in chapter 32 of the Code, 
which applied on the day on which the transaction giving rise to such 
installment accounts took place.''

[T.D. 7536, 43 FR 13520, Mar. 31, 1978]