Rev. Rul. 59-181

Advice has been requested whether the manufacturers excise tax on phonograph records applies to albums, booklets, and selecticators which are sold with phonograph records.

A manufacturer sells albums, booklets, and selecticators with phonograph records of his manufacture. The albums are specially designed or labeled to hold a particular record or a series of related records. A descriptive background of the recorded material is contained in the booklets. The selecticators are time-saving devices which enable a person to locate a desired selection or passage without playing an entire record.

Section 4141 of the Internal Revenue Code of 1954 imposes a tax upon the sale by the manufacturer, producer, or importer of certain enumerated articles, including phonograph records. The tax also applies to parts or accessories for such articles sold on or in connection with the sale thereof. Section 4216(a) of the Code provides, in part, that in determining the price for which an article is sold, there shall be included by charge for coverings and containers of whatever nature.

Since the booklets and selecticators are designed to be used in connection with and to augment the utility of the particular phonograph records with which they are sold, they are considered to be accessories for such records under the provisions of section 4141 of the Code.

Furthermore, since the albums are designed as containers for the particular phonograph records with which they are sold, any charge for those albums must be included in determining the price for which the records are sold, under the provisions of section 4216(a) of the Code.

Accordingly, under the circumstances stated, it is held that the manufacturers excise tax on phonograph records, imposed by section 4141 of the Code, applies to the total price for which the phonograph records, albums, booklets, and selecticators are sold, regardless of whether the albums, booklets, and selecticators are billed separately.