[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR48.4219-1]

[Page 176-177]
 
                       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. 48.4219-1  Sales of taxable articles by a person other than the manufacturer, producer, or importer.

    (a) General rule. If the title to, or ownership of, an article 
taxable under Chapter 32 of the Code is transferred from the 
manufacturer, producer, or importer thereof, and, under the law, no tax 
attaches to such transfer, the subsequent sale, lease, or use of such 
article by the transferee is subject to tax to the same extent and in 
the same manner as if such transferee were the manufacturer, producer, 
or importer of the article. The following examples illustrate this rule:
    (1) The surviving spouse, child or children, executors or 
administrators, or other legal representatives, as the case may be, of a 
deceased manufacturer, producer, or importer of taxable articles, incur 
liability for tax on all such articles sold by them.
    (2) A receiver or trustee in bankruptcy who under a court order 
conducts or liquidates the business of a manufacturer, producer, or 
importer of taxable articles, incurs liability for tax on all taxable 
articles sold by him, regardless of whether the articles were 
manufactured, produced, or imported before or after he took charge of 
the business.
    (3) An assignee for the benefit of creditors of a manufacturer, 
producer, or importer incurs liability for tax with respect to all 
taxable articles sold by him as such assignee.
    (4) If one or more members of a partnership withdraw, or if new 
partners are admitted, the new partnership so constituted incurs 
liability for tax on all taxable articles sold by it regardless of when 
such articles were manufactured, produced, or imported.
    (5) A person who acquires title to taxable articles as a result of 
default of the manufacturer, producer, or importer pursuant to an 
agreement under the terms of which the articles were pledged as 
collateral incurs liability for tax with respect to his sale of the 
articles so acquired.
    (6) A person who succeeds to the business of a manufacturer, 
producer, or importer of taxable articles, such as:
    (i) A corporation which results from a consolidation, merger, or 
reorganization;
    (ii) A corporation which acquires the business of an individual or 
partnership; or
    (iii) A stockholder in a corporation who, after its dissolution, 
continues the business;

incurs liability for tax on all taxable articles sold by such person. 
However,

[[Page 177]]

where a manufacturer, producer, or importer sells only his assets, 
rather than ownership of his business, he incurs liability for tax on 
the sale of any taxable articles included in such assets.
    (b) Transfer of title to damaged articles. If title to a damaged 
taxable article is transferred by the manufacturer, producer, or 
importer thereof to a carrier or insurance company in adjustment of a 
damage claim, such transfer is not considered a taxable sale of the 
article. If the article is usable, even though damaged, the carrier or 
insurance company incurs liability for tax on its sale, lease, or use of 
the article. Where the article has been damaged to the extent that its 
only value is as scrap, and it is not restored to usable condition, sale 
thereof by the carrier or insurance company is not subject to tax.

[T.D. 6687, 28 FR 11782, Nov. 5, 1963]