[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: 26CFR48.6416(c)-1]

[Page 205-206]
 
                       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 O_Refunds and Other Administrative Provisions of Special 
            Application to Retailers and Manufacturers Taxes
 
Sec. 48.6416(c)-1  Credit for tax paid on tires or, prior to January 1, 
1984, inner tubes.

    (a) Allowance of credit against tax on sale of taxable article. If 
tax has been paid under section 4071 on the sale, or under section 4218 
on the use, of a tire or inner tube, and the manufacturer of a another 
article taxable under chapter 32 sells the tire or inner tube on or in 
connection with the sale of that other article, a credit in respect of 
the tire or inner tube is allowable under section 6416(c) against the 
tax imposed on the sale of that other article. The amount of the credit 
is to be determined as provided in paragraph (b) or (c) of this section.
    (b) Tires or tubes purchased by manufacturer of the other article. 
If the manufacturer of the other article purchased the tire or inner 
tube tax-paid, the amount of the credit shall be determined by applying 
to the purchase price of the tire or inner tube the percentage rate of 
tax applicable to the sale of the other article. For this purpose, the 
purchase price shall be determined by including any tax passed on to the 
manufacturer and, in the case of a tire, by excluding any part of the 
price attributable to the metal rim or rim base. For example, if the 
selling price of an automobile truck is $24,000, tax equivalent to 10 
percent of the price (i.e., $2,400) is imposed under section 4601(a) on 
the sale (before April 1, 1983) of the automobile truck. If the tires or 
inner tubes sold on or in connection with the automobile truck are 
purchased by the manufacturer of the automobile truck for $1,500 
(computed as provided in this paragraph) a credit of $150 (10 percent of 
$1,500) is allowable against the tax imposed on the sale of the 
automobile truck.
    (c) Tires or tubes manufactured by manufacturer or other articles. 
If the manufacturer of the other article is also the

[[Page 206]]

manufacturer of the tire or inner tube and incurs tax liability under 
section 4218 on the use by that manufacturer of the tire or inner tube, 
the amount of the credit shall be determined by applying to the fair 
market price of the tire or inner tube, the percentage rate of tax 
applicable to the sale of the other article. For this purpose, the fair 
market price of the tire or inner tube shall be the price at which the 
same or similar tires or inner tubes are sold by manufacturers of tires 
or inner tubes in the ordinary course of trade, as determined by the 
Commissioner, and by excluding, in the case of a tire, any part of the 
price attributable to the metal rim or rim base. The determination of 
the Commissioner shall be made in the same manner as determinations made 
under section 4218.
    (d) Other applicable rules. (1) For purposes of this section, the 
term ``manufacturer'' includes the original manufacturer of the other 
article and any succeeding purchaser of the article who further 
manufactures the article so as to become liable as a manufacturer of an 
article taxable under chapter 32. Therefore, the credit provided by 
section 6416(c) and this section is available both to the original 
manufacturer of the other article and also to every succeeding purchaser 
of that article who sells that article on or in connection with, or with 
the sale of, another article taxable under chapter 32.
    (2) No interest shall be paid on any credit allowed under this 
section.
    (3) If credit is not claimed under this section against the tax 
applicable to the sale of the other article, the manufacturer of the 
other article may claim refund of an amount equivalent to the credit or 
may claim credit on any return of tax under this subpart subsequently 
filed.

[T.D. 8043, 50 FR 32034, Aug. 8, 1985]