Rev. Rul. 54-490

Advice is requested whether a person who manufactures automobile truck bodies for use in the operation of his dairy business and not for sale is liable for the tax imposed by sections 3403(a) and 3444 of the Internal Revenue Code of 1939. The chassis upon which the bodies are mounted are purchased tax paid.

Section 3403(a) of the Code imposes a tax on the sale by the manufacturer of automobile truck bodies. Subject to certain exceptions not here material, section 3444 of the Code provides that any person who manufactures, produces, or imports an article and uses it shall be liable for the manufacturers' excise tax in the same manner as if such article had been sold by him, and the tax (if based on sales price) shall be computed on the price at which such or similar articles are sold, in the ordinary course of trade, by manufacturers, producers, or importers thereof, as determined by the Commissioner.

It is held that a person who manufactures automobile truck bodies and uses them in the operation of his business, as in the instant case, is liable for the tax imposed by sections 3403(a) and 3444 of the Code at the time the bodies are used by him. The tax on such use is to be computed under section 3444 of the Code on the fair market price of the taxable article as determined by the Commissioner. Ordinarily the fair market price is represented by the wholesale price of the taxable article in the case where the manufacturer produces the taxable article in volume and regularly sells it at wholesale. Where, as in the instant case, the articles are custom-made and the manufacturer does not make sales at wholesale, the fair market price of automobile truck bodies has been found to represent the manufacturer's actual cost of producing the bodies plus 10 percent of such cost. However, where a manufacturer believes that the facts and circumstances in his particular case are so different as to justify using a lower tax base, upon receipt of a statement as to the facts and circumstances involved, the Internal Revenue Service will issue a specific ruling in the matter.