Rev. Rul. 59-111

Advice has been requested whether the retailers excise taxes imposed by Chapter 31 of the Internal Revenue Code of 1954 apply to charges for the use of certain articles by a broadcasting company.

A person engaged in the business of selling articles at retail furnishes to a broadcasting company certain articles for use as `props' on television shows. The articles are generally retained by the company for periods of not more than twenty-four hours and are then returned to the retailer, who makes a charge for their use. Included among these articles are some which are of the type that are subject to tax when sold at retail.

Section 4052 of the Code provides that, for purposes of the retailers excise taxes, the lease of an article shall be considered the sale of such article. Section 320.10(a) of Regulations 51, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, provides that the term `lease' means a continuous right to possession or use of a particular article for a period of time. It does not include the use of an article merely as the occasion demands, but the contract must give the lessee the right to possess or use the article, without interruption, for a period of time.

Since, under the circumstances stated, the broadcasting company has a continuous right to possession or use of the articles for a period of time, it is held that the retailers excise tax applies to any charges made by the retailer for the use of articles of the type which are subject to the tax when sold at retail. The length of time for which the articles are leased or rented is considered immaterial.